Havells - Q4 FY21 first cut - YES Securities

Result summary - Q4 continued to sustain growth momentum post strong Q3 performance. Revenue/EBITDA/PAT delivered growth of 40%/106%/53% beating estimates by 12%/20%/7% respectively.

Topline - Revenue grew 50% yoy to Rs 33.3bn led by strong growth across the segments. ECD continues to deliver strong performance with growth of 71%, while Switchgears/Wires and Cables/Lighting & Fixtures/Others delivered growth of 53%/51%/40%/71% respectively. Lloyd mainly consisting of RAC grew 29% in-line with the market. Strong growth is on back of structural shift and market share gains in favor of organized sector where HAVL has been the key beneficiary.

Margins - Gross margins surprisingly expanded 127bps yoy to 37.4% while on sequential basis it has declined 68bps. All other companies that have reported so far have seen sharp contraction in gross margins, could be a factor of better mix and price hikes. EBITDA margin expanded 411bps to 15.2% as company has controlled its expenses well.

Lloyd - Lloyd registered 29% growth in in line with the industry, however EBIT margins is on improving trajectory on back of own domestic manufacturing.

PAT - While EBITDA growth was very strong at 106%, PAT growth was limited to 53% on account of a sharp increase in interest costs (on account of COVID debt) and a sharp increase in tax expenses (could be some one-offs there).

Dividend - The company has declared final dividend of Rs3.5 per share on top of Rs3 interim dividend that it declared in Q3.

Near-term outlook - The onset and ferocity of second wave is impacting the growth. From second week of April, the growth has slowed with further deceleration in May, which we believe is transient and company will be able to return to its strong growth trajectory once Covid situation normalizes.

Our view - After the recent outperformance, the stock is currently trading at rich valuations of 52x FY23E P/E and 36x EV/EBITDA. Better than expected Q4 performance can lead to some more upside from current levels. But given the near-term uncertainties, it should again become range bound before Q1 results which will be closely monitored with regards to the pace of demand recovery in the system.

Shares of HAVELLS INDIA LTD. was last trading in BSE at Rs.1072.65 as compared to the previous close of Rs. 1073.65. The total number of shares traded during the day was 92709 in over 3767 trades.

The stock hit an intraday high of Rs. 1087.95 and intraday low of 1065. The net turnover during the day was Rs. 99734686.

Source : Equity Bulls

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