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UBS Investment Research
First Read: Havells
Zumtobel results show that European
lighting demand is stable
Event: Zumtobel reported stable results
Zumbtobel reported 9.3% YY revenue growth. Southern / Eastern Europe were
relatively weak at 2.7%/3.7% YY. Ex LED lighting revenue growth was 4% YY.
EBIT margins declined 50 bps from 6.1% to 5.6%. Zumtobel management
retained guidance for 10% YY revenue growth for FY12 (April 2012) and margin
expansion. In July, Rexel management had indicated 2-3% volume growth
guidance for CY11. Philips management had also indicated that they have taken
price increases in Lighting.
Impact: European lighting demand is stable yet
Zumtobel results show that the lighting market is relatively stable. We model
Europe / Latin America to grow at (-)2% / 15% YY (Latin America grew at 24%
CAGR over last 4 quarters) and 100 bps margin decline (over Q4FY11).
Action: Retain estimates and price target
We retain our estimates and Rs 510 price target.
Valuation
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool (assuming a WACC of
13.19%). The stock is trading at 12.5x FY12E PE. We believe this is very
attractive for a high-quality business: for FY11-15, we forecast 30%+ ROE and
20%+ EPS growth.
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 Euro 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
First Read: Havells
Zumtobel results show that European
lighting demand is stable
Event: Zumtobel reported stable results
Zumbtobel reported 9.3% YY revenue growth. Southern / Eastern Europe were
relatively weak at 2.7%/3.7% YY. Ex LED lighting revenue growth was 4% YY.
EBIT margins declined 50 bps from 6.1% to 5.6%. Zumtobel management
retained guidance for 10% YY revenue growth for FY12 (April 2012) and margin
expansion. In July, Rexel management had indicated 2-3% volume growth
guidance for CY11. Philips management had also indicated that they have taken
price increases in Lighting.
Impact: European lighting demand is stable yet
Zumtobel results show that the lighting market is relatively stable. We model
Europe / Latin America to grow at (-)2% / 15% YY (Latin America grew at 24%
CAGR over last 4 quarters) and 100 bps margin decline (over Q4FY11).
Action: Retain estimates and price target
We retain our estimates and Rs 510 price target.
Valuation
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool (assuming a WACC of
13.19%). The stock is trading at 12.5x FY12E PE. We believe this is very
attractive for a high-quality business: for FY11-15, we forecast 30%+ ROE and
20%+ EPS growth.
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 Euro 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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