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Friday, 24 March 2017


HAVELLS INDIA LTD reported stable third quarter FY17 with PAT rising at 28% YOY despite demonetization. PAT stood at Rs. 1530 Mn against Rs. 1199 Mn corresponding period previous year. Sequential growth was reported at 5% in the current December quarter. Revenue was seen at Rs. 16221 Mn rising 13% YOY, though growth was slower at 4% sequentially. EBDITA was reported at Rs. 2194 Mn in Q3 FY17 against Rs. 1985 Mn corresponding quarter previous year, registering a double digit growth of 11% YOY. On quarterly basis, EBDITA declined 7% in the current Q3 FY17 as operating expenditure rose 15% YOY. Operating expenditure stood at Rs. 14592 Mn compared to Rs. 12731 Mn corresponding quarter previous year. Other Income too played it’s part and  jumped 2 times YOY buttressing company’s bottom-line in the current quarter. Other Income was reported at Rs. 264 Mn compared to Rs. 134 Mn in Q3 FY16. Increase in other income is due to interest earned on funds received from Sylvania divestment. Havells India witnessed strong volume growth & demand in industrial cable & lighting divisions in the current quarter.  With double digit growth Net Profit Margin rose 105 bp YOY & 8 bp sequentially. One basis point is 1/100th of a percentage. EBDIA & Net Profit Margin stood at 13.52% & 9.43% in the current December quarter. The company is also focused on deleveraging itself as Net Debt has halved from Rs. 553 Mn in Q3 FY16 to Rs. 114 Mn in the current December quarter.  The company has current cash holdings of about Rs.14313 Mn as on 31st December 2016.Havells India Ltd with market cap of Rs. 282455 Mn is a leading FMEG company.  The products of the company range from industrial and domestic circuit protection switchgear, cables and wires, motors, fans, power capacitors, compact fluorescent lamps, luminaries for domestic, commercial and industrial applications, modular switches covering household, commercial and industrial electrical needs, water heater and domestic appliances.   The company has performed well despite a tough demonetization hit December quarter. The company has strong fundamentals and is poised for higher growth with its foray into consumer durables industry with Lloyd acquisition. We recommend BUY for the stock for medium & long term investment with PE multiple of 46.29 x FY17E & 37.14 x FY18E with a target price of Rs. 590.

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