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Prabhudas Lilladher Report
We have downward revised our FY25/FY26E earnings of Havells India Ltd. by 6.4%/8.8% mainly with correction in margins with increased advertising and employee expenses, and raw material price fluctuation.
Havells India's reported healthy growth in revenue mainly with better than expected growth from electrical consumer durable and cables segments (21.5%/14.1% YoY), while Lloyd reported soft revenue growth (+5.4% YoY).
The company indicated that ECD segment growth momentum to continue through summer led demand and uptick in real estate demand. Lloyd strategy remain on growth with profitability while expected to maintain its market share.
We believe the company to focus on growth in coming year with restricted margins. We estimate revenue/Ebitda/profit after tax compound annual growth rate of 15.6%/24.5%/26.8% for FY24-26E with ECD/cables/Lloyd segments revenue CAGR of 13.5%/18.0%/16.2% over FY24-26E and Ebitda margin to reach 11.5% by FY26E (+160 bps).
Maintain ‘Accumulate' rating at a discounted cash flow based target price of Rs 1,774 (earlier Rs 1681), which implies 54 times FY26 earnings per share.
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