Havells expects a better FY25 on strong summer demand and improving consumer sentiment

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Consumer electrical goods maker Havells says an improvement in consumer sentiment since the January-March quarter and strong summer demand driven by intense heat are likely to result in better performance for the current year than FY24.

“The summer season has started off well. Summer seasonality products like air-conditioners, air-coolers, fans which should give us good growth and if the consumer demand continues to hold, that will mean good for the organisation,” Anil Rai Gupta, CMD of Havells,said.

The company reported a 24% year-on-year (YoY) jump in net profit at ₹448.9 crore for the January-March quarter.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) margin was at 11.7%, versus 10.9% in the same period last year.

With all the investments going on, Havells’ expects standalone margins (excluding Lloyd), at between 13% and 14.5%.

The company is making huge investments in Lloyd for brand building, product and market share. “Lloyd has reached a good market share and we will continue to focus on investment in Lloyd for growth, profit and market share,” Gupta said.

He says some product price increases are likely given the volatility in the input costs.

The company is seeing good traction in electric consumer durables (ECD) segment,

“We are definitely expecting a much better performance from ECD segment even on the margins front in FY25.”

Also Read | 2023 was warmest year on record, say IMD, 2024 is going to be warmer

The company will make some new additions such as chimneys and hobs to its kitchen appliances portfolio this month (May).

This will add to the topline of the small domestic appliances business, and in the next 3-5 years, add meaningfully to the market share in this segment.

Brokerage firm UBS has rated Havells a ‘buy’ raising the target price to ₹2,040.

The firm says that profitability is back for the company but sustainability is important to monitor.

UBS believes that the stock has underperformed its peers in the last 12 months but is set to reverse the trend given its sustained competitive positioning, gradual demand uptick as well as upcoming capacities.

Brokerage firm HSBC also has a ‘buy’ rating as it believes the company is now firmly on a strong profit growth path. HSBC raised the target price of the stock to ₹1,800 per share.

Also Read | Severe heat wave conditions to continue over eastern India, forecasts IMD

However, CLSA has downgraded the stock to ‘sell’ from ‘underperform’ citing demanding valuations.

Motilal Oswal has raised earnings per share (EPS) estimates by 4-5% for FY25 and FY26.

But the brokerage firm concurs with CLSA’s views that valuations are expensive. It has also downgraded the stock to ‘neutral’ from ‘buy’ with a target price of ₹1,780 per share.

The current market capitalisation of the company is ₹1,04,721 crore.

For more, watch the accompanying video

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow