* During the quarter, Havells acquired the consumer durables segment of Lloyd Electric and Engineering Limited for an enterprise value of INR16b on a debt-free, cash-free basis. Lloyd’s consumer durables arm has an annual turnover of INR12.4b.
* Standalone revenue is expected to register growth of 8% YoY. We expect the cables segment, which contributes 41% of the company’s revenue, to register 5% YoY growth, led by improvement in the prices of the copper (+11% YoY). Electrical consumer durables (+1.2% YoY) and lighting (+2.5% YoY) divisions are likely to report muted growth.
* We expect operating margin to shrink 230bp YoY to 11.4% in 4QFY17, led by increase in staff cost.
* Net profit is expected to decline 23.5% YoY. Maintain Neutral.
Key issues to watch
* Commentary on the integration of consumer durables arm of Lloyd Electric with itself.
* Commentary on the demonetization-led impact on the sales and guidance for FY18.
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