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UBS Investment Research
Havells India
Strong at home, Sylvania needs no more €
Impressive Q3FY11 results – strong durables and lighting
Havells posted standalone revenue growth of 22% YY and 4.6% QQ. Lighting and
durables (fans + geysers) showed strong YY growth at 27% and 55% respectively.
Switchgear revenue growth was impacted due to reduction in exports. After
adjusting for decline in exports, Switchgear revenue grew at 20% YY.
Contribution margins were stable despite raw material inflation.
Sylvania turnaround ahead of our expectation
Sylvania demonstrated 18% YY revenue growth in Latin America, and 46% YY
growth in Asia (in US$ terms). European revenue were flat YY and increased 13%
QQ. Sylvania EBITDA margins improved sequentially from 4.7% to 5.3%.
Havells management maintained that Q3FY11 was the last quarter of equity
investment from Havells into Sylvania.
Staff cost increased 34% YY– continued focus on growth
Havells continues to invest in future growth by investing in manpower. Manpower
as % of revenue grew from 3.2% in Q3FY10 to 3.5% in Q3FY11. Havells
management reiterated its confidence in growing at a rate above electrical industry
growth rate of 15-18% driven by continued shift from unorganized and organized,
market share gains as well as launch of new products.
Valuation: Reiterate Buy with a PT of Rs 465
We maintain our estimates and SOTP based price target of Rs465, which includes
Rs19 per share for Sylvania and Rs446 for Havells standalone business. At our
price target Havells will trade at 17x FY12E EPS.
Havells India
Havells India (Havells), a leading Indian electrical consumer durables
manufacturer, is focussed on markets including switchgear, fans, lighting and
fixtures, and cables and wires. In April 2007, it acquired Sylvania's European,
Latin American, and Asian operations for 227m. Havells was incorporated in
1983.
Statement of Risk
HVEL is present in market segments that may face increased competition from
competitors, which may hurt our revenue growth as well as margin assumptions.
HVEL derives 30% of its consolidated revenue from Europe. Severe slowdown
in Europe can hurt HVEL consolidated revenue and profits.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Havells India
Strong at home, Sylvania needs no more €
Impressive Q3FY11 results – strong durables and lighting
Havells posted standalone revenue growth of 22% YY and 4.6% QQ. Lighting and
durables (fans + geysers) showed strong YY growth at 27% and 55% respectively.
Switchgear revenue growth was impacted due to reduction in exports. After
adjusting for decline in exports, Switchgear revenue grew at 20% YY.
Contribution margins were stable despite raw material inflation.
Sylvania turnaround ahead of our expectation
Sylvania demonstrated 18% YY revenue growth in Latin America, and 46% YY
growth in Asia (in US$ terms). European revenue were flat YY and increased 13%
QQ. Sylvania EBITDA margins improved sequentially from 4.7% to 5.3%.
Havells management maintained that Q3FY11 was the last quarter of equity
investment from Havells into Sylvania.
Staff cost increased 34% YY– continued focus on growth
Havells continues to invest in future growth by investing in manpower. Manpower
as % of revenue grew from 3.2% in Q3FY10 to 3.5% in Q3FY11. Havells
management reiterated its confidence in growing at a rate above electrical industry
growth rate of 15-18% driven by continued shift from unorganized and organized,
market share gains as well as launch of new products.
Valuation: Reiterate Buy with a PT of Rs 465
We maintain our estimates and SOTP based price target of Rs465, which includes
Rs19 per share for Sylvania and Rs446 for Havells standalone business. At our
price target Havells will trade at 17x FY12E EPS.
Havells India
Havells India (Havells), a leading Indian electrical consumer durables
manufacturer, is focussed on markets including switchgear, fans, lighting and
fixtures, and cables and wires. In April 2007, it acquired Sylvania's European,
Latin American, and Asian operations for 227m. Havells was incorporated in
1983.
Statement of Risk
HVEL is present in market segments that may face increased competition from
competitors, which may hurt our revenue growth as well as margin assumptions.
HVEL derives 30% of its consolidated revenue from Europe. Severe slowdown
in Europe can hurt HVEL consolidated revenue and profits.
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