Result Update: Havells India Ltd - SELL - TP Rs.500 - Kotak

HIL Q4FY18 PAT outperformed our estimates on back of higher revenue growth and margins in lighting and consumer appliances segments. We take note of the margin expansion reported by the company in the current inflationary scenario. We see margins expanding further in FY19/20, consistent with management view.

Key Highlights

Havells reported 48.2% y/y revenue growth at Rs 25.3 Bn in Q4FY18 driven by consumer durables and lighting business. Ex-lloyd revenues grew 14% y/y.

Operating margin, reported at 14.1% in Q4FY18 were driven by the higher contribution margin in all the segments.

Lloyd reported revenue Rs 18.75 Bn in FY18. Company reported Lloyd EBITDA margin for FY18 at 8% and 12.3% in Q4FY18.

Valuation & Outlook

We tweak our FY20 earnings estimate to build improved margin in Havells and Lloyd business. However, in view of expensive valuations (at PER 32.8x FY20 earnings) we maintain 'SELL' rating with revised target price of Rs 500 (Rs 477 earlier; ascribe target PER of 30x on FY20 earnings).

Shares of HAVELLS INDIA LTD. was last trading in BSE at Rs.544.85 as compared to the previous close of Rs. 543.1. The total number of shares traded during the day was 38442 in over 818 trades.

The stock hit an intraday high of Rs. 547.6 and intraday low of 538.05. The net turnover during the day was Rs. 20903764.

Source : Equity Bulls

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