Havells entry's to intensify competition in kitchen appliances space, says CLSA

Brokerage CLSA has said Havells entry will make the large kitchen appliances space more competitive. Havells India plans to expand its product portfolio by foraying into the kitchen appliances by introducing a range of cooktops, hobs, chimneys and other built-in appliances.

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The range is expected to be launched around May and Havells is targeting to become a top three player over three years.

"The new venture is expected to bring benefits of synergies of business with its existing range of small domestic appliances," the said company in a filing with the exchanges.

The brokerage said if Havells achieves a market share of around 10 percent, it would lead to a share value accretion of around Rs 45-70 a share.

On February 27, Goldman Sachs upgraded the rating for the wires and cables manufacturer to a "buy" from "neutral" . The global brokerage also increased the price target to Rs 1,660 from Rs 1,540.

The brokerage views Havells' cost-control initiatives positively, including the move to shift outsourcing to its manufacturing facilities. The company's continued investments in brands and human resources, even during a downturn, are seen as favourable.

Goldman Sachs anticipates that Havells will resume revenue growth in the teens beginning the March quarter, following two consecutive quarters of single-digit growth. The expected improvement in margin contribution from the Lloyd brand will enhance visibility on profitability, subsequently driving an increase in valuation.

On March 5, the Havells stock settled at Rs 1,542 a share, down 0.8 percent.

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