Havells India Q3 Results Review - Long-Term Story Intact; Near-Term Risks Prevail: Nirmal Bang

Nirmal Bang Report

Havells India Ltd.'s topline was below our estimate by 3.8% due to subdued demand across categories and Ebitda margin was below our estimate by 67 basis points.

Easing inflationary pressures coupled with a low base on YoY basis are expected to boost growth in Q4 FY24. Room AC exports under Lloyds brand is a focus area for Havells (has set up a subsidiary in the U.S.).

Havells is open to venture as an original equipment manufacturer player in the export markets if the opportunity arises.

We maintain 'Accumulate' with a revised target price of Rs 1,260 on SOTP basis (implied price-to-earning of 40 times on December-25E earnings per share).

We have cut our multiples by ~10%. While we remain structurally positive about the long-term growth prospects, near term risks prevail in terms of slower growth in B2C businesses.

We see limited upside potential due to the stock trading close to fair value. We await a better entry point and would re-instate previous multiples upon positive swings in B2C businesses.

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