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Motilal Oswal Report
Havells India Ltd. beat our estimates in Q4 FY24, aided by better margins in all business segments, except ECD. Lloyd reported Ebit margin of 2.7% after losses in 10 consecutive quarters. Revenue growth of mere 6% YoY for Lloyd was disappointing, though FY24 revenue growth stood at 12.5% YoY.
Ebitda for Havells India came in at Rs 6.3 billion versus estimated Rs 5.7 billion and operating profit margin was 11.7% versus estimated 10.3%. Profit stood at Rs 4.5 billion versus estimated Rs 3.9 billion.
The management highlighted that primary sales have been strong for room ACs, though the north region is yet to witness demand pick-up. The company is neither stocking too much nor facing stock-outs. Lloyd maintains its market share on a full-year basis and would maintain a balance between growth and profitability, though market share gains will always be preferred.
We raise our earnings per share estimates for FY25/FY26 by 4%/5% to account for better margins in the cables and switchgear businesses. The stock has been up 25% since our initiation and currently trades at 63 times/51 times FY25E/FY26E EPS, reflecting the growth we anticipate.
Given its expensive valuations, we are revising our rating to Neutral from Buy. We value the stock at 55 times FY26E EPS to arrive at our target price of Rs 1,780 with a 7% potential upside.
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