Havells Shares Hit Record High After Q4 Profit Beat, Analysts Raise Target Price
Havells India Q4 net profit rose 24.8% year-on-year to Rs 447 crore, beating Bloomberg's estimate. This prompted brokerages to raise the target price on the stock.
Shares of Havells India Ltd. hit an all-time high on Thursday after its fourth-quarter profit surged, beating analysts' estimates, prompting brokerages to raise the stock's target price. They also raised consumer electronic producer's earnings estimates for better margins but were cautious about their stance due to higher valuations, seasonality and input cost headwinds.
Havells India's fourth-quarter net profit rose 24.8% year-on-year to Rs 447 crore.
CLSA raised their FY25/26 earnings per share by 7–10%, mainly on better margins, while raising revenues by 1%. It also raised its target multiple due to strong growth and a better margin outlook.
Citi Research, too, increased the price-to-earnings target to 60 times from 53 times earlier due to signs of demand revival and improvement in AC business margin. According to management comments, Citi stated that initial signs of B2C demand improvement are visible. "However, the impact of pending price hikes due to commodity cost inflation needs to be monitored," Citi added.
Nuvama Institutional Research anticipates further margin improvement on price hikes in Q1 FY25 and volume growth.
CLSA has downgraded Havells India from 'underperform' to 'sell' while raising the target price to Rs 1,560 per share from earlier Rs 1,325 apiece. Citi maintained a 'neutral' rating with the target price raised to Rs 1,814 per share from Rs 1,544 apiece earlier.
Citi Research
Citi Research maintains 'neutral' on Havells India, raising the target price to Rs 1,814 from Rs 1,544 earlier.
Growth was led by an improvement in Lloyd margin.
The key negative was muted 6% year-on-year growth in Lloyd's revenue.
Signs of real-estate-led demand pickup are also visible.
Q1 will see broad-based price hikes to pass on commodity-cost inflation.
Nuvama
The brokerage retains 'hold' with the target price raised to Rs 1,605 apiece from the earlier Rs 1,376 apiece.
Q4 results beat estimates, led by higher-than-anticipated EBIT margins and PAT.
Switchgear and electronic consumer durables surprised positively.
Cables and wires were in-line with estimates, while lighting and Lloyd posted sub-par growth.
B2C segment continues to suffer from pricing erosion.
Anticipate further improvement in margins on price hikes in Q1 FY25 and volume growth.
Cable facilities are coming into H1FY25 to cause further growth in cables and wire.
Anticipates an uptick in B2C from H2FY25 onwards.
CLSA On Havells
CLSA downgrades Havells India to 'sell' but raises the target price to Rs 1,560 apiece from the earlier Rs 1,325 apiece.
Q4 results were ahead of estimates on better margins, but the top line was lower.
Margin improvement is led by cost savings, better efficiencies and higher utilisations.
Lloyd margins improved, but growth was soft at 6% YoY, indicating a market share loss.
Pick-up in summer products is encouraging, while B2B remains buoyant.
Given the seasonality and input cost headwinds, the brokerage adopted a cautious stance.
Forecast FY25/26 Ebitda margin of 10.2%/11.2% vs. 10% in FY24.
Shares of Havells rose as much as 2.58% during the day to an all-time high of Rs 1,706.85 apiece on the NSE. It was trading 0.83% higher at Rs 1,677 per share apiece, compared to a 0.12% advance in the benchmark Nifty 50 as of 9:52 a.m.
The stock has risen 36.9% in the last 12 months, and 21.7% so far in the year. The total traded volume so far in the day stood at 7.5 times its 30-day average. The relative strength index was at 75.
Twenty-seven out of the 44 analysts tracking the company have a 'buy' rating on the stock, 13 recommend a 'hold' and four suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 1.1%.
