Havells Q3 Results Review - Weak; Demand, Margins Likely To Revive From Q4; Systematix Maintains 'Buy'

Havells' revenue growth was led by electrical consumer durable (up 15%, demand uptick in SDA) and Lloyd (up 13%) segments and restricted by cables (up 7% YoY, wires destocking by channel) and lighting (up 3% YoY, LED price erosion)..NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.Havells India Ltd.'s weak operating result in Q3 (revenue up 11% YoY, Ebitda/PAT down 1%/3% YoY; Ebitda margin down 108 bps YoY at 8.7%) was driven by mixed results across key categories. Revenue growth was led by ECD (up 15%, demand uptick in SDA) and Lloyd (up 13%) segments and restricted by cables (up 7% YoY, wires destocking by channel) and lighting (up 3% YoY, LED price erosion). Ebitda margin was majorly impacted by switchgear (higher mix of lower margin project sales + plant relocation), ECD (higher mix of SDA), Others (business scale up) and Lloyd (lean season) segments. Infrastructure and industrial demand remains robust. Consumer demand improved a bit during festivals. Management expects a gradual recovery in demand across segments and is confident of margins normalising in the coming quarters. It plans a Rs 8-10bn annual capex over next two years, majorly on Cables and Refrigerator. After a weak Q3, we cut our earnings estimates by 1-9% on lower margin expectations. We now expect 16%/22%/24% CAGR in revenue/ Ebitda/PAT over FY24-27E (FY19-24: 13%/9%/10%) driven by healthy results in all the key segments. Robust free cash flow (Rs 10 billion plus annually despite continued large annual capex), 30%+ RoCE and 50%+ RoIC in FY27E will support Havells’ rich valuation. Maintain Buy with a target price of Rs 1,952 (50x FY27E P/E, earlier Rs 1,978). .Click on the attachment to read the full report:.Havells India Share Price Up As It Remains Nuvama's Preferred Pick After Q3 Results.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Havells Q3 Results Review - Weak; Demand, Margins Likely To Revive From Q4; Systematix Maintains 'Buy'

Robust free cash flow, 30%+ RoCE and 50%+ RoIC in FY27E will support Havells’ rich valuation, adds the brokerage.

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