MOSL: Morning India (7/December/17)-1. EcoScope-2. Havells India-3. TVS Motor Co.-4. Granules India

​MOrning India (7/December/17): 1. EcoScope; 2. Havells India; 3. TVS Motor Co.; 4. Granules India

Today’s top research idea

Havells: Expanding share in electricals sector; Upgrade to Buy

• Continuously entering new categories to drive growth: HAVL has consistently identified and entered new product categories over the years. 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.
  
• GST rate cuts to accelerate market share gains from unorganized sector: The government has cut GST rates across electrical categories from 28% to 18%, and this should accelerate the shift toward the organized sector, especially in categories like cables/wires, fans, switches and lighting, where the share of the unorganized segment is high.
  
• EESL threat recedes: Our recent meeting with EESL indicates that its focus has now shifted to electric vehicles, smart meters and solar rooftops from fans and lighting. This should benefit electrical players like Havells.
  

Piping hot news

RBI raises inflation forecast, leaves interest rate unchanged

• The Reserve Bank of India’s (RBI) monetary policy committee (MPC) kept the key interest rate unchanged on Wednesday, noting risks to inflation, but expressed optimism that the slowdown in economic growth had bottomed out. The decision was in line with market expectations. The repurchase rate—the rate at which the central bank infuses liquidity in the banking system— was left unchanged at 6%.