Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  

| More

Maintain ADD on Havells - Sharp margin recovery; Lloyd back on track - HDFC Securities

Posted On: 2020-10-30 08:27:11

Mr. Naveen Trivedi, Institutional Research Analyst, HDFC Securities

Havells reported a stellar 2QFY21 with a massive jump in operating margin. Core business posted revenue/EBIT growth of 6/45% YoY. Lloyd clocked 56% YoY revenue growth with 2% EBIT margin vs. 25% loss YoY. We were also expecting quicker recovery in margin than revenue; however, the magnitude of margin recovery beat ours as wells as the street's expectation. We believe some of the cost will restore in 2HFY21 (A&P, Employee, etc.). Hence, margin expansion will be healthy, but unlike 2Q's. Havells has once again proved its execution superiority by gaining share for core business and turnaround in Lloyd. We increase EPS estimates owing to (1) quicker recovery in B-C business, (2) expected healthy pick-up of B-B in 2HFY21, (3) turnaround in Lloyd, (4) cost savings initiatives (the company is reversing several high overhead cost built over the past 2 years) and (5) operating leverage on margin. We increase EPS by 32/11/11% for FY21/22/23. We value Havells at 40x P/E on Sep-22E EPS to derive a target price of Rs 715. Maintain ADD.

B-C supports revenues: Revenue grew by 10% YoY (+2% in 2QFY20 and - 46% in 1QFY21), vs expectation of 4% growth. Switchgears/Lighting/ ECD/Lloyd saw revenue grow by 2/4/18/56% YoY. RAC drove Lloyd recovery, and B-C Lighting registered 15% YoY growth. Cables declined by 5% YoY due to sluggish B-B. Domestic wires grew by 18% YoY.

All-time high EBITDA margin: Gross margin expanded by 89bps YoY (+103bps in 2QFY20 and -281bps in 1QFY21) vs an expectation of +39bps YoY. Employee/ASP declined by 11/74% YoY while other expenses increased by 1% YoY. EBITDA margin expanded by 662bps YoY (-144bps in 2QFY20 and -140bps in 1QFY21) to 17.2% (all-time high). EBITDA grew by 79% YoY to Rs 4.2bn (HSIE Rs 2.7bn). EBIT margins for Switchgears/Cables/ Lighting/ECD expanded by 700/160/760/560bps YoY. PBT grew by 106% YoY while APAT grew by 80% YoY (lower tax rate in the base quarter).

Concall takeaways: (1) Residential real estate demand improved; (2) rural revenue grew 140% YoY (~4% revenue mix now); (3) in-house production stands at 75%; (3) 1,100 distributors on its online to offline platform so far; (4) FY21 Capex at Rs 3.3bn; (5) healthy margin is sustainable.

Shares of HAVELLS INDIA LTD. was last trading in BSE at Rs.729 as compared to the previous close of Rs. 725.05. The total number of shares traded during the day was 102699 in over 3200 trades.

The stock hit an intraday high of Rs. 740.65 and intraday low of 712. The net turnover during the day was Rs. 74542292.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

Views of HDFC Securities and Acuité Ratings & Research on Q2FY21 GDP Numbers

Rollover Report for November 2020 - December 2020: Angel Broking

Initiating Coverage on Godrej Properties - The housing factory - HDFC Securities

Burger King IPO - Angel Broking

Rollover Analysis - Record foreign inflows pushes Nifty to 13k - YES Securities

Ceramic tiles industry - Market share gains sustain for top branded players - ICICI Securities

Gas sector - CGD: Competition to hit margins, volumes and lead to derating - ICICI Securities

Cement - Prices resilient in Q3; consensus upgrades to continue - ICICI Securities

Specialty chemicals - Price trend in Sep-20 - ICICI Securities

Timken India - Q2FY21 Company Update - ICICI Direct

Upgrade in target price of IDFC First Bank - Angel Broking

Laurus Labs stake acquisition in Richore Lifesciences - Angel Broking

Shares of Lakshmi Vilas Bank (LVB) suspended from trading - Angel Broking

Initiating Coverage on Sundram Fasteners - Fastening growth - HDFC Securities

Astral Poly Technik - Scalability to further improve with storage tanks foray - ICICI Securities

Vardhman Special Steel - Q2FY21 Company Update - ICICI Direct

Initiating Coverage - Advanced Enzyme Technologies - ICICI Direct

L&T - Secures Large Contract - Nov 25, 2020 - Angel Broking

Alembic Pharmaceuticals - Tentative Approval for JV - Angel Broking

Drug launch by Lupin - Tacrolimus Capsules - Angel Broking

Gujarat Gas - Nov 25, 2020 - Angel Broking

Metropolis Healthcare - Nov 25, 2020 - Angel Broking

NTPC - Showcase of strength & competitiveness - ICICI Securities

Telecom - Market Share TRACKER - Bharti is narrowing the gap on incremental market share vs RJio - ICICI Securities

Cochin Shipyard - Q2FY21 Result Update - ICICI Direct

Engineers India - Q2FY21 Result Update - ICICI Direct

Rupee - Nov 24, 2020 - Reliance Securities

FMCG Sector Update - Recovery unlocked; lower growth divergence - HDFC Securities

Engineers India - Consultancy segment outperformance - ICICI Securities

Engineers India - Q2 FY21 Result Update - YES SECURITIES

Motherson Sumi Systems - Company Update - Virtual Investor Conference - ICICI Direct

Mutual Fund Review - November, 2020 - ICICI Direct

Sadbhav Engineering - Q2FY21 Company Update - ICICI Direct

IRB Infrastructure - Q2FY21 Company Update - ICICI Direct

Vodafone Idea fund raising - Angel Broking

Rupee - Nov 23, 2020 - Reliance Securities

Crude Oil - Nov 23, 2020 - Reliance Securities

Q2FY21 Bank Result Quick Review - Angel Broking

Banks & NBFC's Sector Update Report - Yet another watershed moment? - HDFC Securities

Galaxy Surfactants - EBITDA/kg has an upside risk - ICICI Securities

Diagnostics - COVID-19 tests continue to trend higher - ICICI Securities

Banking & Financial Services - Sector Update - Nov 22, 2020 - ICICI Direct

Dalmia Bharat Sugar - Q2FY21 Company Update - ICICI Direct

Balkrishna Industries - Industry export growth momentum continues - ICICI Securities

Covid Recovery Pulse - Festive positivity continues in auto retails, E-way bill generation improves... - ICICI Direct

Quant Pick - Exide Industries - ICICI Direct

Shankara Building Products - Q2FY21 Company Update - ICICI Direct

Triveni Engineering - Q2FY21 Company Update - ICICI Direct

Initiating Coverage on Sudarshan Chemical - Leaping into the league of giants - HDFC Securities

Earnings Wrap Q2FY21: Earnings outperform, post Covid recovery picks up steam - ICICI Direct

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019