Havells India Q3 Results Review - Summer Products To Drive Demand Revival; Reiterate 'Buy': Yes Securities

Yes Securities Report

Havells India Ltd. growth has been lower as consumer demand continues to remain subdued off setting strong growth in business-to-business categories. All business-to-consumer categories have posted muted low single digit growth, while B2B categories like cables and professional lighting continues to see strong traction.

Gross margins continue to improve on back of stable commodity prices, while higher advertising and promotion spends have resulted lower Ebitda margins.

We are factoring FY23-26E revenue/Ebitda/profit after tax compound annual growth rate of 12%/21%/23%. We have marginally lowered our margin estimates as company will not shy away from making brand investments in Lloyds as company believes there is sustainable growth opportunities in the longer term which company wants to take advantage.

We reiterate our 'Buy' rating with target price to Rs 1,597 valuing the stock at 50 times on FY26 earning per share.

We foresee gradual improvement in demand from Q4 as its growth drivers like real-estate continues to see demand traction and private capex activity is expected to pick up steam with continued strong government capex.

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