The Havells India stock has come a long way since it was listed on March 21, 2001. The electric consumer durables firm seems to be a favourite among the analysts. The firm's stock price rose from Rs 1.62 in July 2002 to Rs 548 today, translating into 33,727% returns for the shareholders in nearly 16 years.
The firm which will report Q4 earnings on May 30, 2018 enjoys a hold call, according to analysts recommendations and revisions covered by Reuters.
Geojit Financial Services too has given an accumulate rating on Havells India with a target price of Rs 624 in its research report dated January 23, 2018.
"Havells is trading at a one year forward P/E of 41x which is significant premium. Given lower GST rates going forward, we expect earnings to grow at healthy 20% CAGR over FY17-20E. We roll our estimates to FY20E and value HAVL at P/E of 38x to arrive at a target price of Rs 624 and maintain to accumulate," the report states.
Cholamandalam Securities in a February 2018 report has assigned 'Buy' ratings to the stock with target price of Rs 665.
"We introduce FY20E estimates Revenue/EPS 20% / 22.8% YoY. At current market price, the stock trades at 51.7X, 42.1X & 34.3X FY18E, FY19E & FY20E respectively. We roll over our valuation to FY20E, valuing the company 40XFY20E EPS to arrive at a target price of Rs 665 (earlier: Rs 459) and upgrade the stock to a BUY rating," the report states.
"Higher built-up in dealer inventory, competition from both foreign and domestic players and speedy market share gain from unorganized players are some risks which are expected for the firm, the report states," it added.
The firm is engaged in manufacturing switchgears, cable, lighting and fixtures, and electric consumer durables. The company operates through four segments: Switchgears, Lighting and fixtures, Cables and Electrical Consumer Durables.
The Switchgear segment comprises domestic and the industrial switchgears, electrical wiring accessories, industrial motors, pumps and capacitors.
Q3 earnings
Havells India reported a 27% rise in stand-alone net profit to Rs 194.36 crore for the quarter ended in December 2017, compared to a profit of Rs 152.97 crore a year ago.
Total income during the quarter under review stood at Rs 1,993.53 crore versus Rs1,650.68 crore in the year-ago period. The company said the results are not comparable with previous period as it had acquired consumer durable business of LEEL Electricals Ltd in May last year.
Post the announcement of Q3 earnings, brokerage Motilal Oswal raised the earnings estimate in FY20 by 3% to factor in better-than-estimated operating margins, driven by cost-control measures.