Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Havells India (HAVL)
Others
India business outperforms on margins front. Havells consolidated (adjusted)
EBITDA for 2QFY12 at Rs1.70 bn was 18% higher than our estimates led by India
business which reported adjusted EBITDA margin at 13.5% (+280 bps qoq; +180 bps
yoy), 280 bps above our estimates. Apportioning advertising expenses (Rs560 mn in
1HY2012) equally in the first two quarters, EBITDA margins have declined by 70 bps
qoq (from 12.5% in 1QFY12 to 11.8% in 2QFY12).Even after adjusting for lower
advertising expenses qoq, results are at large variance to industry trends visible till
now—Crompton, V-Guard reported large qoq decline (>200 bps) in EBITDA margins in
2QFY12. Increase in working capital (Rs1 bn) is our only other concern. We will adjust
our estimates post concall. Retain REDUCE.
India business outperforms; Sylvania in line
Havells’ consolidated revenue in 2QFY12 at Rs15.85 bn (+19% yoy; +6% qoq) was exactly in line
with our estimates. Reported PAT at Rs808 mn (+16% yoy; +2% qoq) was in line with our
estimates as forex losses at Rs301 mn subdued the otherwise strong operating performance.
Outperformance was led by India business which reported adjusted EBITDA margin at 13.5%
(+280 bps qoq; +180 bps yoy) which was 280 bps higher than our estimates. While the reported
numbers are good, we make the following observations:
Apportioning advertising expenses in1HY2012 (Rs560 mn; Rs420 mn in 1QFY12 and Rs140 mn
in 2QFY12) equally in the first two quarters EBITDA margins have declined 70bps qoq (from
12.5% in 1QFY12 to 11.8% in 2QFY12). Decline in margins is much lower than our
expectations and is at variance with the industry trends —Crompton, V-Guard have reported
large (>200 bps) sequential de-growth in EBITDA margins in 2QFY12. As per our understanding
from channel checks and recent conference calls (V-Guard), there was lot of pressure on pricing,
particularly in the fans segment, in 2QFY12, as companies reduced prices to clear inventories.
This is not reflected in the segmental results of consumer appliance division as contribution
margins at ~27.7% are flat yoy. 1QFY12 contribution margins in the same segment were
higher (at 31%) than normalized on account of sale of low priced inventory.
Working capital increased by Rs1 bn qoq at the standalone level even as the quarterly run rate
of revenues increased by Rs500 mn from 1QFY12. In the post result conference call (1QFY12),
management had indicated a sequential improvement in working capital position in 2QFY12 on
reduction of inventories.
Maintain REDUCE with an unchanged target price of Rs370
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Havells India (HAVL)
Others
India business outperforms on margins front. Havells consolidated (adjusted)
EBITDA for 2QFY12 at Rs1.70 bn was 18% higher than our estimates led by India
business which reported adjusted EBITDA margin at 13.5% (+280 bps qoq; +180 bps
yoy), 280 bps above our estimates. Apportioning advertising expenses (Rs560 mn in
1HY2012) equally in the first two quarters, EBITDA margins have declined by 70 bps
qoq (from 12.5% in 1QFY12 to 11.8% in 2QFY12).Even after adjusting for lower
advertising expenses qoq, results are at large variance to industry trends visible till
now—Crompton, V-Guard reported large qoq decline (>200 bps) in EBITDA margins in
2QFY12. Increase in working capital (Rs1 bn) is our only other concern. We will adjust
our estimates post concall. Retain REDUCE.
India business outperforms; Sylvania in line
Havells’ consolidated revenue in 2QFY12 at Rs15.85 bn (+19% yoy; +6% qoq) was exactly in line
with our estimates. Reported PAT at Rs808 mn (+16% yoy; +2% qoq) was in line with our
estimates as forex losses at Rs301 mn subdued the otherwise strong operating performance.
Outperformance was led by India business which reported adjusted EBITDA margin at 13.5%
(+280 bps qoq; +180 bps yoy) which was 280 bps higher than our estimates. While the reported
numbers are good, we make the following observations:
Apportioning advertising expenses in1HY2012 (Rs560 mn; Rs420 mn in 1QFY12 and Rs140 mn
in 2QFY12) equally in the first two quarters EBITDA margins have declined 70bps qoq (from
12.5% in 1QFY12 to 11.8% in 2QFY12). Decline in margins is much lower than our
expectations and is at variance with the industry trends —Crompton, V-Guard have reported
large (>200 bps) sequential de-growth in EBITDA margins in 2QFY12. As per our understanding
from channel checks and recent conference calls (V-Guard), there was lot of pressure on pricing,
particularly in the fans segment, in 2QFY12, as companies reduced prices to clear inventories.
This is not reflected in the segmental results of consumer appliance division as contribution
margins at ~27.7% are flat yoy. 1QFY12 contribution margins in the same segment were
higher (at 31%) than normalized on account of sale of low priced inventory.
Working capital increased by Rs1 bn qoq at the standalone level even as the quarterly run rate
of revenues increased by Rs500 mn from 1QFY12. In the post result conference call (1QFY12),
management had indicated a sequential improvement in working capital position in 2QFY12 on
reduction of inventories.
Maintain REDUCE with an unchanged target price of Rs370
No comments:
Post a Comment