Broker’s call: Havells India (Buy)

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Target: INR 1,553

CMP: 1309

Havells Limited (HAVL) is a leading manufacturer of electrical and consumer appliances. HAVL offers many products such as switchgear, lighting, lamps, cables and wires (C&W), fans, appliances, air conditioners, washing machines and electric water heaters.

The company manufactures about 90 percent of its products in-house at 15 manufacturing units nationwide. Besides its flagship “Havell’s” brand, the company’s other major brands include Crabtree, Standard, Rio and Lloyd’s. The company has an extensive distribution network of more than 17,000 direct dealers and more than 2,20,000 retailers as of FY23.

The company’s main export markets were driven by switch products; It is gradually expanding into C&W, Lighting and Air Conditioning. HAVL aims to enhance its brand recognition and strengthen its market presence abroad.

HAVL has several organic and inorganic levers to continue its growth momentum while improving profitability.

Based on our projected cash flow run rate, we believe HAVL can make an acquisition every 3-4 years without putting undue pressure on the balance sheet. We think the same could pay off once Lloyd becomes stable and self-sufficient.