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UBS Investment Research
Havells India
Sylvania’s European exposure
„ Peripheral European Countries are not significant to Sylvania
There has been negative news-flow about sovereign debt in Greece and Portugal.
However, Greece and Portugal together contribute only 2% of Sylvania’s total
revenue (and 3% of Sylvania’s European revenue).
„ European construction and lighting demand
European construction has been strong as indicated by Euroconstruct data.
Lighting demand and demand for electrical products in Europe has been strong.
Zumtobel (a European lighting company) and Rexel (European electrical products
distributor) posted robust results. We expect Havells to benefit from robust end
market environment.
„ Sylvania turnaround to show improvement
We expect Sylvania’s operational improvement to show progress on the back of
continued cost cutting and margin improvement initiatives.
„ Valuation: maintain Buy rating with price target 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. Currently
Havells trades at 14.7x standalone PE; this does not include value of Standard
Electric which is not consolidated yet and does not include.
Q 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.
Q 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
Sylvania’s European exposure
„ Peripheral European Countries are not significant to Sylvania
There has been negative news-flow about sovereign debt in Greece and Portugal.
However, Greece and Portugal together contribute only 2% of Sylvania’s total
revenue (and 3% of Sylvania’s European revenue).
„ European construction and lighting demand
European construction has been strong as indicated by Euroconstruct data.
Lighting demand and demand for electrical products in Europe has been strong.
Zumtobel (a European lighting company) and Rexel (European electrical products
distributor) posted robust results. We expect Havells to benefit from robust end
market environment.
„ Sylvania turnaround to show improvement
We expect Sylvania’s operational improvement to show progress on the back of
continued cost cutting and margin improvement initiatives.
„ Valuation: maintain Buy rating with price target 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. Currently
Havells trades at 14.7x standalone PE; this does not include value of Standard
Electric which is not consolidated yet and does not include.
Q 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.
Q 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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