Q4 results review: Havells India shares hit record high on strong earnings despite MOSL downgrade

However, the brokerage inactive sees a 7 percent upside to ₹1,780 for the banal station its March 4th (Q4FY24) results reported yesterday connected May 1.

Stock terms trend

On the backmost of beardown results, the banal jumped 2.5 percent successful intra-day deals to deed a caller precocious of ₹1,706.70, however, it aboriginal erased immoderate gains to crook level but remained successful the affirmative territory.

It has present surged 41 percent from its 52-week debased of ₹1,211.05, deed successful May 2023. In the past 1 year, the banal has precocious 36 percent portion adding astir 25 percent successful 2024 YTD.

Read here: Atul Auto banal spikes 10% to 7-week precocious arsenic income emergence 136% successful April

The banal has been volatile successful 2024 truthful acold giving affirmative returns successful 2 of the 4 completed months this twelvemonth and antagonistic successful the different 2. The scrip gained astir 10 percent successful April aft a 1 percent autumn successful March. In February arsenic well, the banal rallied implicit 18 percent but had shed implicit 5 percent successful January this year.

Earnings

The FMEG large reported a 24 percent year-on-year (YoY) summation successful its nett net astatine ₹448.86 crore successful Q4FY24 versus ₹361.71 successful the aforesaid play past year. Meanwhile, its gross roseate 12 percent YoY to ₹5434.34 crore successful the March 4th against ₹4,849.59 crore successful the aforesaid play a twelvemonth ago. Its Earnings earlier interest, tax, depreciation, and amortisation (EBITDA) grew 20 percent to ₹637 crore successful the 4th fourth of FY24.

Read here: Multibagger Shakti Pumps stock terms hits precocious circuit fueled by beardown Q4 show

The institution has besides declared a last dividend of ₹6 per equity share. “The Board of Directors decided to urge a Final Dividend @ ₹6/- per equity stock of Re. 1/- each i.e. 600 percent for the fiscal twelvemonth 2023-24. This is successful summation to the Interim Dividend declared during the FY 2023-24 for an magnitude of ₹3/- per share," said the institution successful an speech filing.

Meanwhile, for the afloat fiscal twelvemonth FY24, the company's nett net roseate 18.4 percent to ₹1,273.21 crore portion the gross accrued 10 percent to ₹18,549.90 crore.

Read here: Ambuja Cements Q4 nett net up 6% YoY to ₹532 cr; declares dividend of ₹2

Q4 results review

Reviewing the company's March 4th results, the brokerage said that HAVL bushed its estimates successful Q4FY24, aided by amended margins successful each concern segments, but ECD (Electrical Consumer Durables). Lloyd reported an EBIT borderline of 2.7 percent aft losses successful 10 consecutive quarters. Revenue maturation of specified 6 percent YoY for Lloyd was disappointing, though FY24 gross maturation stood astatine 12.5 percent YoY.

MOSL further noted that Havell's absorption highlighted that superior income person been beardown for RACs (room aerial conditioners), though the northbound portion is yet to witnesser request pick-up. The institution is neither stocking excessively overmuch nor facing stock-outs. Lloyd maintains its marketplace stock connected a full-year ground and would support a equilibrium betwixt maturation and profitability, though marketplace stock gains volition ever beryllium preferred.

Read here: Multibagger IRB, GPT Infra, 2 others shares leap up to 354%. Buy oregon Sell?

"The banal has been up 25 percent since our initiation and presently trades astatine 63x/51x FY25E/FY26E EPS, reflecting the maturation we anticipate. Given its costly valuations, we are revising our standing to Neutral from BUY. We worth the banal astatine 55x FY26E EPS to get astatine our TP of INR1,780 with a 7 percent imaginable upside," it said.

Estimates

Post the Q4 results, MOSL has raised its EPS estimates for FY25/FY26 by 4 percent/5 percent to relationship for amended margins successful the cables and switchgear businesses.

It besides expects HAVL to study a CAGR of 14 percent/23 percent/26 percent successful revenue/EBITDA/PAT implicit FY 24-26. MOSL has assumed a gross CAGR of 20 percent for Lloyd, portion different concern segments should present a gross CAGR of 11-14 percent, it predicted. MOSL has besides factored successful Lloyd to interruption adjacent successful FY25E and estimation an EBIT borderline of 2 percent successful FY26.

The brokerage believes that investments successful strengthening the marque equity of Lloyd and expanding the organisation web would payment the institution successful the agelong run.

Read here: Indian Oil result: Should you bargain the banal arsenic IOC Q4 effect misses estimates

Furthermore, MOSL expects to spot improvements successful its Return connected Equity (RoE) and Return connected Invested Capital (RoIC) by FY26. These metrics are projected to emergence to 20.6 percent and 30.4 percent, respectively, compared to 17.1 percent and 23.6 percent successful FY24. Over the fiscal years 2015 to 2024, the institution averaged a RoE of 18.3 percent and a RoIC of 28.8 percent.

Despite important superior expenditure (capex), the institution has managed to make escaped currency travel (FCF) successful astir years. Between FY15 and FY23, the institution generated operating currency travel (OCF) of ₹9,290 crore and spent ₹4,720 crore successful capex, noted the brokerage. Going forward, it expects Havells to make OCF of ₹3,470 crore implicit FY 24-26, portion capex volition beryllium ₹1,500 crore. This volition assistance amended nett currency to ₹4,360 crore vs ₹3,040 crore successful Mar '24, stated MOSL.

Disclaimer: The views and recommendations made supra are those of idiosyncratic analysts oregon broking companies, and not of Mint. We counsel investors to cheque with certified experts earlier making immoderate concern decisions.

Unlock a satellite of Benefits! From insightful newsletters to real-time banal tracking, breaking quality and a personalized newsfeed – it's each here, conscionable a click away! Login Now!

Published: 02 May 2024, 11:32 AM IST