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UBS Investment Research
Havells India
View weakness post Crompton results as
b uying opportunity
Event: Crompton consumer product weakness is company specific
Crompton Greaves (Crompton) reported a 2% YoY increase and 1% QoQ decline
in revenue in the consumer products division. As per Crompton management, this
is attributable to increased competition in the consumer products division and the
company’s price hike. Additionally, Crompton management has indicated that
demand has been strong in all products except for fans, where demand was weak
due to the mild summer. Our checks indicate the spending environment on white
goods and electrical appliances remains strong.
Impact: we retain our estimates
We retain our estimates for Havells India (Havells).
Action: we maintain our Buy rating
We maintain our Buy rating. We view the weakness in the share price as a buying
opportunity.
Valuation: maintain Rs510.00 price target
We maintain our Rs510.00 price target. We derive our price target from a DCFbased
methodology and explicitly forecast long-term valuation drivers using
UBS’s VCAM tool.
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. A severe
slowdown in Europe could hurt HVEL’s consolidated revenue and profits, in our
view.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Havells India
View weakness post Crompton results as
b uying opportunity
Event: Crompton consumer product weakness is company specific
Crompton Greaves (Crompton) reported a 2% YoY increase and 1% QoQ decline
in revenue in the consumer products division. As per Crompton management, this
is attributable to increased competition in the consumer products division and the
company’s price hike. Additionally, Crompton management has indicated that
demand has been strong in all products except for fans, where demand was weak
due to the mild summer. Our checks indicate the spending environment on white
goods and electrical appliances remains strong.
Impact: we retain our estimates
We retain our estimates for Havells India (Havells).
Action: we maintain our Buy rating
We maintain our Buy rating. We view the weakness in the share price as a buying
opportunity.
Valuation: maintain Rs510.00 price target
We maintain our Rs510.00 price target. We derive our price target from a DCFbased
methodology and explicitly forecast long-term valuation drivers using
UBS’s VCAM tool.
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. A severe
slowdown in Europe could hurt HVEL’s consolidated revenue and profits, in our
view.
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