MOSL: HAVELLS INDIA (Upgrade to Buy)- Expanding share in the electrical sector in India; Entry into durables adds another leg of growth
​HAVELLS INDIA: Expanding share in the electrical sector in India; Entry into durables adds another leg of growth
(HAVL IN, Mkt Cap USD4.9b, CMP INR507, TP INR590, 16% Upside, Upgrade to Buy)
- - Continuously entering new categories to drive growth: Havells India (HAVL) has consistently identified and entered new product categories over the years (see Exhibit 1). Some of the key categories where it has made a successful entry include lighting in 2003, premium fans in 2005, water heaters in 2010, REO Switches in 2012, air coolers in 2014, re-launch of the Standard brand in 2016 (target of INR10b by FY20) and entry into EHV cables. The recent acquisition of Lloyd gives HAVL a strong foothold in the fast growing durables segment – the aim is to double revenue in the next three years through new product launches, expansion of existing product portfolio and increased channel penetration (in talks with large format stores to stock Lloyd products).
- - GST rate cuts to accelerate market share gains from the unorganized sector: The government has cut GST rates across electrical categories from 28% to 18% and this should accelerate the shift towards the organized sector, especially in categories like cables/wires, fans, switches and lighting, where the share of the unorganized segment is high. Implementation of the E-waybill from April 2018 would further accelerate this transition. Media reports suggest a cut in rates from 28% to 18% for durables as well – this would have a positive impact on Lloyd’s sales in air-conditioners for the upcoming summer season in 2018.
Havells India is a Fast Moving Electrical Goods (FMEG) company based in India. Co. is active across a variety of market segments with a wide spectrum of products, including Industrial & Domestic Circuit Protection Devices, Cables & Wires, Motors, Pumps, Fans, Modular Switches, Home Appliances, Electric Water Heaters, Power Capacitors, CFL Lamps, Luminaires for Domestic, Commercial and industrial Applications. Co.'s global brand names include Havells, Crabtree, Sylvania, Concord, Luminance and Standard. Co. maintains a global network consisting of 91 branches & representative offices in over 50 countries. Co.'s manufacturing plants are loacted in India, Europe, Latin America, Africa & China.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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