Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Maintain ADD on Havells India - Robust performance despite the odds - HDFC Securities

Posted On: 2021-07-25 07:24:04 (Time Zone: UTC)


Havells delivered a strong Q1FY22 performance despite the industry facing several challenges due to COVID-19. Revenue grew by 76% YoY (HSIE 68%), driven by strong performance across all segments, notably switchgears and ECD. While our channel checks suggested a ~15% revenue decline vs. Q1FY20, Havells, through its superior execution capabilities, managed to control the revenue decline to 4% (vs. Q1FY20), as against the 46% YoY dip registered in Q1FY21. With the second wave hitting India at the peak of summer season, Lloyd lost out on crucial sales; however, it posted slightly higher revenue than our expectation (24% down vs. Q1FY20). Despite steep raw material inflation, gross margin was resilient. The company saw 99bps YoY expansion in gross margin to 35.7% but it was down 170bps QoQ. EBITDA margin expanded by 474bps YoY to 13.6% (HSEI 13.3%), but was down 160bps QoQ. EBITDA grew by 170% YoY (HSIE 152%), clocking a 13% two-year CAGR. We expect the growth momentum to sustain, owing to healthy underlying demand (driven by housing activities), share gains, and revival in B-B. We continue to value Havells at 50x P/E on Jun-23E EPS to derive a target price of INR 1,200. We expect the rich valuation to sustain; maintain ADD.

Continued its all-round performance: Revenue was up 76% YoY (HSIE 68%), but it was down by only 4% on Q1FY20 vs. the 46% YoY dip in Q1FY21. Switchgears / cables / lighting / ECD delivered YoY growth of 96/75/52/91% while compared to Q1FY20, the growth was +9/+4/-16/+3%. Lloyd lost out on crucial peak summer sales still it registered only 16% QoQ dip. Our channel checks suggest that the RAC industry saw a higher decline (on Q1FY20) than electrical categories. We expect revenue growth momentum to sustain with inspiring industry recovery, housing activities, and share gain. Havells has undertaken several initiatives for Lloyd, but it has yet to go through a full normal season for us to understand the extent of recovery of the brand.

Beat in margin: GPM was up by 99bps YoY (down 281bps in 1QFY21 and +127bps in 4QFY21), lower than our expectations of 131bps YoY expansion. Employee/A&P/other expenses grew by 32/645/48% YoY on a low Q1FY21 base. EBIT margin for switchgears/cables/lighting/ECD/Lloyd expanded by 1.2pp/770bps/1.3pp/-58bps/-2bps YoY to 27/16/15/12/2%. EBITDA margin saw an expansion of 474bps YoY to 13.6% (-140bps in 1QFY21 and +411bps in 4QFY21). EBITDA grew by 170% YoY (HSIE +152%).

Con call takeaways: (1) Compared to the first wave, in the second one, the demand was more driven by the underlying trend instead of pent-up demand. (2) Project execution this year is driving B-B growth. (3) Lloyds' inventory levels are high at company level (are expected to normalise in 1-2 quarters) while trade level inventory is not at a high level. (4) Capex plans remain unchanged at INR 5bn and INR 10bn for the next two years.

Shares of HAVELLS INDIA LTD. was last trading in BSE at Rs. 1143.85 as compared to the previous close of Rs. 1151.45. The total number of shares traded during the day was 149697 in over 8903 trades.

The stock hit an intraday high of Rs. 1166.55 and intraday low of 1139.05. The net turnover during the day was Rs. 172203831.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.


Other Headlines:

Automobile Sector - Monthly Quick View - Aug'21 - Mixed Performance across Segments - Reliance Securities

Axis Securities initiating coverage on ICICI Securities

Company Update - Minda Corporation - Q1FY22 - ICICI Direct

Quant Pick - PVR Ltd - ICICI Direct

Quant Pick - ONGC - ICICI Direct

Peak in the headline wholesale inflation is behind us - WPI August 2021 - Acuité Ratings

Sansera Engineering - IPO - Strong Outlook with Steady Cash Flow - Reliance Securities

APL Apollo Tubes - Journey from a semi-commodity player to a branded one - HDFC Securities

Nazara Technologies Ltd - Upbeat in medium-term, Uncertain over Long-term - YES Securities

IPO Review - Sansera Engineering Ltd - ICICI Direct

Overall index is still 0.3% lower than the pre-pandemic levels - IIP July 2021

YES SECURITIES on Monthly General Insurance & Mutual Funds Data

India urban logistics spaces expected to cross 7 million sq. ft by 2022: JLL

Neogen Chemicals - Breaking into the next orbit with a bang - HDFC Securities

Gladiator Stocks - Bharti Airtel Ltd - ICICI Direct

Gladiator Stocks - V-Guard - ICICI Direct

Balkrishna Industries - Industry export growth accelerates - ICICI Securities

HDFC Life Insurance - Exide Life Acquisition - Maintain ADD - YES Securities

Gladiator Stocks - Grindwell Norton - ICICI Direct

Gladiator Stocks - Godrej Properties - ICICI Direct

Monthly Auto Volumes - August 2021 - ICICI Direct

Stock Tales - Easy Trip Planners - ICICI Direct

IPO Review - Vijaya Diagnostic Centre Ltd - ICICI Direct

AU Small Finance Bank - Attrition at top level remains key challenge; business momentum sustained in Jul/Aug'21 - ICICI Securities

Gladiator Stocks - State Bank of India - ICICI Direct

Gladiator Stocks - PNC Infratech - ICICI Direct

Vijaya Diagnostic Centre Ltd - IPO Note - YES Securities

Consumer Durables Sector - Lockdown mars performance yet again - Institutional Research Desk at HDFC Securities

75% of the employees today want to be in office at least once a week as compared to 52% in October 2020: JLL

Gladiator Stocks - Safari Industries - ICICI Direct

Gladiator Stocks - Interglobe Aviation - ICICI Direct

IPO Review - Ami Organics Ltd - ICICI Direct

Q1FY22 GDP - 31st Aug 2021 - Acuité Ratings & Research

Avanti Feeds - Higher input prices hurt margins - ICICI Securities

Company Update - Restructuring - Aarti Industries - ICICI Direct

Q1FY22 Company Update - MM Forgings - ICICI Direct

Company Update - Arvind Fashions - ICICI Direct

Zomato - Can margins and multiples surprise? - ICICI Securities

Ujjivan Small Finance Bank - Top management change and lumpy provisioning concern to weigh on valuation in near term - ICICI Securities

Bharat Dynamics - Guided missile systems to drive orderbook and profit growth - ICICI Securities

Economy - Continued accommodation necessary despite inflationary risks: MPC minutes - ICICI Securities

InterGlobe Aviation - Annual report analysis: Liquidity management remains the mainstay in anticipation of traffic recovery - ICICI Securities

General insurance - Health remains dominant growth driver; Strong all-round performance by Bajaj Allianz - ICICI Securities

Earnings Wrap Q1FY22: Resilient earnings, limited impact of second Covid wave - ICICI Direct

Fine Organic Industries Results Review - In-line performance - HDFC Securities

Power Plus Sector Update - July witnessed strong ~10% generation growth - HDFC Securities

Information Technology Sector Update - 'Hit Refresh' - HDFC Securities

Maintain ADD on JK Cement - Healthy performance - HDFC Securities

Maintain BUY on Star Cement - Margin recovers on pricing gain - HDFC Securities

Maintain BUY on Sadbhav Engineering - Long road to recovery - HDFC Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020