Havells India’s share price surged over 2% on Thursday following the company’s announcement of a 24% profit increase in the fourth quarter of fiscal year 2024. Havells India shares soared by as much as 2.52% to reach an intra-day high of Rs 1,706.85 per share on the NSE.
Havells India posted a net profit of Rs 448.86 crore for the quarter ending March of FY24, marking a significant increase of 24.1% compared to the previous year’s figure of Rs 361.71 crore during the same period.
The company’s revenue from operations also witnessed a notable growth of 11% year-on-year in Q4 of FY24, reaching Rs 5,434.34 crore, compared to Rs 4,849.59 crore recorded in the corresponding period a year ago.
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Furthermore, Havells India announced a final dividend of Rs 6 per equity share. In an exchange filing, the company stated, “The Board of Directors decided to recommend a Final Dividend @ Rs. 6/- per equity share of Re. 1/- each i.e. 600 % for the financial year 2023-24. This is in addition to the Interim Dividend declared during the FY 2023-24 for an amount of Rs. 3/- per share.”
Brokerages on Havells India
Motilal Oswal on Havells India
According to a recent report by Motilal Oswal, Havells India is expected to showcase impressive growth prospects in the coming years. The report forecasts a Compound Annual Growth Rate (CAGR) of 14% for revenue, 23% for Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), and 26% for Profit After Tax (PAT) over the period spanning FY24 to FY26.
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Despite a 25% increase in the stock price since initiation, Havells India is currently trading at 63x and 51x FY25E and FY26E EPS, indicating the anticipated growth. Due to its relatively high valuations, the report suggests a revision in rating from BUY to Neutral. The stock is valued at 55x FY26E EPS, with a target price of Rs 1,780, representing a 7% potential upside.
The report highlights a projected revenue CAGR of 20% for Havels’ Lloyd segment, while other business segments are anticipated to deliver revenue growth ranging from 11% to 14%. Motilal Oswal’s estimates factor in Lloyd breaking even in FY25 and achieving an EBIT margin of 2% by FY26.
Investments aimed at enhancing the brand equity of Lloyd and expanding the distribution network are expected to yield long-term benefits for the company, according to the report.
Furthermore, Havels’ Return on Equity (RoE) and Return on Invested Capital (RoIC) are projected to improve significantly, reaching 20.6% and 30.4%, respectively, by FY26. This marks a notable increase from 17.1% and 23.6% in FY24, with an average RoE/RoCE of 18.3%/28.8% observed during FY15-24.
Despite substantial capital expenditure, Havels has demonstrated the ability to generate Free Cash Flow (FCF) over the years. The report indicates that the company generated Operating Cash Flow (OCF) of Rs 92.9 billion from FY15 to FY23, with a capex expenditure of Rs 47.2 billion.
Looking ahead, OCF is expected to reach Rs 34.7 billion over FY24-26, with a projected capex of Rs 15 billion. This forecasted performance is anticipated to bolster net cash reserves to INR 43.6 billion by FY26, compared to Rs 30.4 billion in March 2024.
In light of improved margins in the cables and switchgear businesses, Motilal Oswal has revised its earnings per share (EPS) estimates for FY25 and FY26 upward by 4% and 5%, respectively.
Prabhudas Lilladhar on Havells India
Prabhudas Lilladhar’s latest report on Havells India highlights the company’s Q4FY24 results, indicating robust growth in its Electrical Consumer Durables (ECD) segment and a positive turnaround for the Lloyd division.
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The report maintains an ‘Accumulate’ rating for Havells India, with a revised target price of Rs 1,774 (previously Rs 1,681) based on a Discounted Cash Flow (DCF) valuation. This target price implies a price-to-earnings ratio of 54x FY26 earnings per share.
However, the report mentions a downward revision in earnings estimates for FY25 and FY26 by 6.4% and 8.8%, respectively. This adjustment primarily stems from margin corrections due to increased advertising and employee expenses, as well as fluctuations in raw material prices.
Havells India achieved healthy revenue growth in Q4FY24, particularly driven by better-than-expected performance in the ECD and Cables segments, which saw year-on-year growth rates of 21.5% and 14.1%, respectively. In contrast, the Lloyd segment reported softer revenue growth at 5.4% year-on-year.
The company’s outlook remains positive, with expectations of continued growth momentum in the ECD segment due to increased summer-led demand and a pickup in real estate activity. Havells plans to pursue growth while maintaining profitability in the Lloyd segment, aiming to sustain its market share.
Prabhudas Lilladhar projects a Compound Annual Growth Rate (CAGR) of 15.6% for revenue, 24.5% for Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA), and 26.8% for Profit After Tax (PAT) from FY24 to FY26.
This estimation includes revenue CAGRs of 13.5% for ECD, 18.0% for Cables, and 16.2% for Lloyd segments over the same period, with an anticipated EBITDA margin expansion to 11.5% by FY26.
Havells Share Performance in Last one year
In terms of stock performance, Havells India shares have demonstrated positive returns across multiple time frames. Over the past month, the stock has given a commendable 8.11% return, showcasing its stability and growth potential. The last six months have seen even more impressive results, with a substantial increase of 31.86%, indicating a strong upward trend.
Year-to-date, Havells India shares have surged by 22.55%, reinforcing the stock’s positive momentum in the current fiscal year. Looking at the broader picture, the stock has delivered an impressive return of over 36.21% in the last twelve months, emphasizing its sustained growth and attractiveness to investors.
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