Geojit has given an accumulate rating to Havells India with a target price of Rs 528 based on 37 times on FY22E.
Havells’ Q4FY20 revenue declined by 19.5 per cent YoY, on account of weak demand scenario due to Covid-19 leading to a loss of Rs.800cr. EBITDA margin declined by 70bps year on year, on account of a fall in RM prices and lower than expected sales. PAT declined by 14 per cent year on year.
Investment Rationale
Going ahead, the first quarter of FY21E is likely to be the worst quarter on account of the extension of lockdown. The brokerage has lowered its EPS estimates by 45 per cent & 19 per cent for FY21E & FY22E, as it has factored in the impact of Q4 & Q1FY21E on its estimates. However, the brokerage believes that near term concerns have already factored in the stock price. Given the likelihood of underperformance in the near term, it has downgraded the rating to accumulate with a target price of Rs 528.
Financials
For the quarter ended March 31, 2020, the company reported consolidated sales of Rs 2217.44 crore, down -2.46 per cent from last quarter sales of Rs 2273.29 crore and down -19.51 per cent from last year's same quarter sales of Rs 2754.77 crore. The company reported net profit after tax of Rs 177.73 crore in the latest quarter.
Promoter/FII Holdings
Promoters held 59.52 per cent stake in the company as of March 31, 2020, while FIIs held 23.04 per cent, DIIs 8.5 per cent and public and other 8.94 per cent.