Havells India Q2 Review - Strong Demand Outlook Despite Inflationary Environment: Prabhudas Lilladher
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Prabhudas Lilladher Report
Havells India Ltd. reported sustained momentum in demand despite inflationary environment. Price hikes are likely given raw material volatility; margins seem to have bottomed out.
We increase our FY22-FY24 earnings estimate by 2-4% given resilient demand momentum despite an inflationary environment given
robust festive season build-up
strong housing segment demand
healthy traction in industrial and infrastructure portfolio
sustained gains at unorganised sector’s expense
Although, HAVL negatively surprised with gross margin compression, however, we believe margins have bottomed out given strong demand outlook, improving mix and calibrated price increase.
We expect HAVL to benefit from demand uptick in both consumer and industrial/infra (25% of sales) portfolio given
1) Diverse product portfolio covering 70%+ of household electric sockets
2) Amongst top 3 players in most product categories (except Lloyd)
3) Lloyd portfolio gaining traction
4) Focus on innovation and expansion of distribution reach
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