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UBS Investment Research
Havells India
Bajaj Electricals results: positive takeaway
f or Havells
Event: positive read through for Havells from Bajaj Electricals results
Bajaj Electricals has three segments: 1) lighting; 2) durables (fans and smaller
ticket size electrical appliances such as mixers, electric irons, air coolers, ovens,
water heaters and rice cookers); and 3) engineering and projects (E&P). Havells
India (Havells) is present in the first two segments. Lighting revenue grew 16%
YoY in Q1 FY12 and EBIT margin expanded 300bp. Durables revenue grew 15%
YoY. Margins were flat YoY. This is particularly impressive since fan growth
was slow this quarter due to the mild summer.
Impact: read through for Havells is positive
There have been concerns about a slowdown in consumer durables after Crompton
announced results. However, the Bajaj Electricals results show a robust demand
environment for consumer durables. Bajaj Electricals’ margins dropped in E&P—
however this segment is not relevant to Havells.
Action: maintain estimates and Buy rating
We maintain our estimates and Buy rating on Havells.
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 could face increased competition from
competitors, which could impact 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 profit.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Havells India
Bajaj Electricals results: positive takeaway
f or Havells
Event: positive read through for Havells from Bajaj Electricals results
Bajaj Electricals has three segments: 1) lighting; 2) durables (fans and smaller
ticket size electrical appliances such as mixers, electric irons, air coolers, ovens,
water heaters and rice cookers); and 3) engineering and projects (E&P). Havells
India (Havells) is present in the first two segments. Lighting revenue grew 16%
YoY in Q1 FY12 and EBIT margin expanded 300bp. Durables revenue grew 15%
YoY. Margins were flat YoY. This is particularly impressive since fan growth
was slow this quarter due to the mild summer.
Impact: read through for Havells is positive
There have been concerns about a slowdown in consumer durables after Crompton
announced results. However, the Bajaj Electricals results show a robust demand
environment for consumer durables. Bajaj Electricals’ margins dropped in E&P—
however this segment is not relevant to Havells.
Action: maintain estimates and Buy rating
We maintain our estimates and Buy rating on Havells.
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 could face increased competition from
competitors, which could impact 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 profit.
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