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Published on 11/01/2018 2:52:05 PM | Source: Motilal Oswal Securities Ltd

Buy Havells India Ltd For Target Rs.620.00 - Motilal Oswal

Posted in Broking Firm Views - Long Term Report| #Power Sector #Broking Firm Views Report #Havells India Ltd #Motilal Oswal

Strong prospects across product categories

We recently met Havells India’s (HAVL) senior management at its analyst meet. Key takeaways:

Target to be in top 5 (preferably top 3) across categories

* HAVL remains focused on a) non-residential/B2B market and projects, b) mass premium market in electricals, c) increasing channel reach/width and d) expanding share in west and south India, where it has historically had a weak presence.

* Distribution channel: For HAVL, dealers form a key part of the distribution network. The company intends to continue expanding the width/depth of its distribution channel and also its omni-channel presence.

* The company targets to establish a meaningful presence across categories (to be among top 5, preferably top 3) to ensure industry leading growth and market share expansion across segments.

* Focus on organic growth: It does not plan any big-bang acquisitions, but will focus on India and bridging product gaps. Growth driven by expansion into new product categories; targets to more than double sales in 4-5 years

* 1996: Started with the cable/wires business as it wanted to grab the available opportunities then; today, the share of electricals is 40% of sales

* 2000: Acquired STANDARD switchgear, which has a strong presence in south India. Revitalized the brand in 2013, and plans to take the business size to INR10b from INR4b currently

* 2003: Launched fans – first switchgear/cable company to do so. Now all peer companies have a presence in this segment

* 2004: Decided to set up a large-scale integrated manufacturing facility in Baddi, Himachal Pradesh; now has 12 manufacturing plants across India

* 2005: Premium fans launched; not present in economy fans (40% of the market); focus remains only on superior products

* 2006: Channel financing with Yes bank; innovative three-way financing, which is off balance sheet and marks a tectonic shift for the company

* 2007: National advertising – sponsored the T20 WC; gained significant voice share; first electricals company to do this

* 2007: Uniform discount policy across channels and dealers, irrespective of the size; this helped improve margins

* 2007: Sylvania was taken over – first acquisition outside of India; it was sold in 2015 though

* 2012: Entered water heaters; thereafter forayed into appliances in 2013 and pumps in 2017; acquired Lloyd Electric; water purifiers to be launched soon.

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