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  • Stock Recommendation: Havells India Ltd – SELL – TP Rs.500

    Publish date: July 23, 2018

    Result update

    HIL Q1FY19 PAT was slightly lower than our estimates due to lower margins in the lighting segment. However we are encouraged by the sales and margin growth reported in other segments/Lloyd. We see margin expansion in FY19/20, consistent with management view.

    Key Highlights

    • Havells reported 39.5% y/y revenue growth at Rs 25.9 Bn in Q1FY19 driven by consumer durables and lighting business. Ex-lloyd revenues grew 19% y/y.
    • Operating margin, reported at 12% in Q1FY19 was driven by the higher contribution margin in switchgear, cables, consumer durables and Lloyd business.
    • Lloyd reported revenue of Rs 7.08 Bn and EBITDA margin at 9.3% in Q1FY19.

    Valuation & outlook

    We maintain our FY20 earnings estimate. In view of expensive valuations (at PER 33.6x FY20 earnings) we maintain 'SELL' rating with unchanged target price of Rs 500.

         

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