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Havells declines 3% but brokerages still positive

HSBC has maintained the buy call on the stock with a target price of Rs 775.

ETMarkets.com|
Last Updated: May 30, 2019, 03.40 PM IST
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Brokerages are of the view that the company faced multiple headwinds during the fourth quarter that impacted the sales.
NEW DELHI: Shares of Havells India declined almost 3 per cent to Rs 709.30 in Thursday's session, a day after the company reported a decline of 8.38 per cent in its standalone net profit to Rs 206.83 crore for the March 2019 quarter, impacted by a slowdown in demand.

The company had posted a net profit of Rs 225.76 crore for the January-March quarter a year ago.

Brokerages are of the view that the company faced multiple headwinds during the fourth quarter that impacted the sales.

"Havells’ reported a 9 per cent miss in Q4FY19 sales due to multiple headwinds including delayed arrival of summer, liquidity crisis and political uncertainty amid weak consumer sentiments," said JM financial.

Under absorption of overheads in core Havells segments coupled with input cost pressures in Lloyd (currency volatility, customs duty on inputs) led to 10 per cent year-on-year (YoY) decline in Ebitda, the brokerage added.

The brokerage maintained a buy recommendation on the stock with a June 2020 target price of Rs 800, citing that the company continues to take significant initiatives on product portfolio and distribution expansion adequately supported by robust brand spends.

Besides, brokerage believes a recent pick up in summer exposed products (fans, ACs) and political stability should help improve business prospects. Delayed pickup in macros is a key risk for the company, the brokerage underscored.

HSBC has also maintained the buy call on the stock with a target price of Rs 775, citing strong earnings growth outlook.

However, the brokerage said it sees the continuation of softness in demand in the first quarter.

The shares of the company pared losses and closed 0.82 per cent higher at Rs 736 on BSE.
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