Havells - Strong Investments In Premiumisation, Manufacturing Capabilities: ICICI Securities

ICICI Securities Report

We note:

1. Havells India Ltd. reported recovery in Ebitda margin in FY24 from a cyclical low in FY23 due to lower commodity prices and reduction in Lloyd losses. We model the recovery to continue in FY25-26E.

2. It has done strong investments in capex across all segments such as refrigeration and air conditioning , cables and wires and energy management system plant at Neemrana.

3. It has also strengthened its distribution network with 5.9%, 11.3% and 19.2% increase in dealers, retail outlets and electricians, respectively, YoY.

4. It has introduced multiple products with higher focus on lifestyle instead of just product functionality.

5. Investments in Lloyd have started yielding results now with steady expansion in market share as well as reduction in losses.

Havells has strong EVA generation with expansion in return ratios. Free cash flow has also remained strong in spite of higher capex due to reduction in working capital days.

We remain positive on Havells led by its strong competitive advantages such as large product portfolio, established brands, sub-segmentation strategy and strong distribution network. Maintain 'Buy'.

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