Broker’s Call: Havells India (Buy)

Target: 1,420 rupees

CMP: INR 1,353.95

In its annual report for FY23, Havells emphasized increasing industrialization, maximizing value creation and increasing investment in research and development. Having 90 percent of the products manufactured in-house ensures that quality standards are maintained and customer needs are met.

Havells is focused on ensuring its presence across the value chain with a growing presence in e-commerce, deeper penetration into India through the Rural Vistaar program and Utsav stores, increased participation in B2B projects, and expansion of its presence in international markets.

Havells continues to invest in R&D (Rs. 550 crore over the past five years) to remain competitive in an environment where disruption becomes the new normal. Lloyd gained market share during the year and is now among the top 3 players in the industry. It expects to maintain its position in the medium term.

Operationally, Havells posted a resilient performance in FY23 with sales growing by 21 per cent despite weak consumer sentiment, while PAT fell by 17 per cent year-on-year due to suboptimal passage of input cost inflation. Although weaker demand is expected in the near term due to unseasonal rains and weaker summer intensity, we continue to like Havells’ long-term growth strategy through continued portfolio expansion, distribution and brand building initiatives.