Accumulate Havells India; target of Rs 1774: Prabhudas Lilladher

Prabhudas Lilladher's research report on Havells India

We have downward revised our FY25/FY26E earnings by 6.4%/8.8% mainly with correction in margins with increased adv. & employee expenses, and RM price fluctuation. Havells India’s (HAVL IN) reported healthy growth in revenue mainly with better than expected growth from ECD 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 & 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.

Outlook

We estimate Revenue/EBITDA/PAT CAGR 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 (+160bps). Maintain ‘Accumulate’ rating at a DCF based target price of Rs1,774 (earlier Rs 1681), which implies 54x FY26 EPS.

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