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Friday, January 27, 2023

Dividend paying shares change from ₹1 lakh to ₹12 Cr after 1 bonus share. To buy?

With a market capitalization of Rs. 72,208.38 Cr., Havells India Limited is a large-cap company operating in the consumer discretionary industry. Fast Moving Electrical Goods (FMEG) company Havells India Limited has a wide range of products for domestic, commercial and industrial applications. In declaring its Q3FY23 results, the company announced a 300% dividend for which 01.28.2023 has been set as a record date and, due to the company’s T+2 settlement mechanism, shares will convert ex-dividend on 01-25-2023.

Havells India Dividend

The company has said in a stock exchange filing that “The Board of Directors has also declared an Interim Dividend of Rs. 3/- per capital share of Re. 1/- each, that is, 300% of the company’s share capital. The same will be payable to all those Shareholders whose names appear in the Register of Members on the Registration Date, that is, 01.28.2023 (a separate indication of the same has already been given to the Stock Exchange dated 01.06. 2023). The Dividend will be paid/sent to shareholders on or before 30 days from the date of its declaration, that is, on or before February 17, 2023.”

Havells India Q3FY23 Result

In Q3FY23, the company reported net sales of $4,127.57 Cr compared to $3,664.21 Cr reported in Q3FY22, representing a YoY growth of 12.71%. Havells India posted a consolidated net income of $283.52 Cr in the quarter ended December 2022 vs. $305.82 Cr registered in the quarter ended December 2021, which represents a 7.30% YoY drop. The company registered a EPS of $4.53 per share in Q3FY23 compared to $4.88 posted in the prior year quarter.

Havells India Stock Price and Additional Stock History

On the NSE, Havells India shares closed Friday at $1,152.00 each level, 4.43% less than the previous close of $1,205.45. The stock posted total volume of 3,037,526 shares compared to a 20-day average volume of 1,017,725 shares. The stock price rose from $1.89 on March 23, 2001 at the current market price, reaching an all-time high of 60,852.38%. If a shareholder had invested Rs. 1 lakh on this stock at its initial price stage, he or she would have received 52,910 shares. However, after the first announcement of the released shares, made on October 8, 2010, in a ratio of 1:1, the number of shares would have increased to a total of 1,05,820. As a result, the total 1,05,820 shares are now worth more than Rs. Rs 12.19 crore, based on the current market price.

Havells India share price target

Following Havells India’s third quarter earnings, Yes Securities research analysts said: “Havells has once again delivered revenue growth in line with sequential margin improvement. Growth was supported by higher volumes across all product categories, with the B2B side outperforming, while the B2C business was impacted by the high inflation environment. Margins improved sequentially on the back of stable commodity prices, as most of Havells’ high-cost inventory was sold off in the third quarter. Management expects further margin improvement in the fourth quarter as high cost inventory for Lloyds would be liquidated in the fourth quarter. Management is cautiously bullish on demand as channel fills for summer products have been strong for Fans and RAC, while rising commodity prices since late December could lead to margin volatility in the future”. factoring FY22-25E revenue growth trajectory of 15% CAGR. However, we have cut our margin estimates considering again increasing volatility in commodity prices, increased investments in brand development and normalization in A&P expenses We estimate EBITDA and PAT CAGR of 13% and 16% respectively We maintain our target price at $1,480 valuing the stock at 55x and extending our target multiple and reiterating our BUY recommendation. We see strong revenue growth momentum and gradual margin improvement over the next 2 years as the company increases its distribution presence in e-commerce and rural areas. We continue to maintain our positive stance on the shares and the current correction in share prices should be used to accumulate shares as we believe the company can continue to outperform the industry and its peers.”

Prabhudas Lilladher said in a note that “We have revised our FY23/FY24 earnings up and maintain a ‘BUY’ rating on Havells India (HAVL IN). The improvement in ECD, primarily with lower fan inventories and expected price increases, strong performance in the cable business, and expected sequential reduction in losses at Lloyd’s with lower high-cost inventory and higher prices , will bode well for Havells in the coming quarters. We are optimistic about long-term growth prospects considering 1) its diverse product portfolio covering 70% of household electrical outlets, 2) it is in the top 3 players in most product categories 3) the focus is on innovation and continuous drive for brand affinity and 4) expansion of distribution reach with emphasis on the untapped rural market (through the rural project vistaar covered 40,000 points of sale in fiscal year 22 and the planned opening of >1000 Utsav stores by FY23). We estimate an earnings CAGR of 16.9% during FY22-25 and assign a DCF-based price target of Rs 1,447. Hold ‘BUY'”.

Nirmal Bang Securities said: “Havells India reported revenue of Rs 41.2bn in Q3 FY2023, up 12.8% year-on-year (3Y ACR of 22%), up 2.1%/1, 8% above our consensus estimates thanks to healthy growth across all business verticals. Switchgears/Cables/Lighting & Fixtures/ECD/Lloyd grew 3.7%/17.1%/3%/4.7%/30.3% YoY. Gross margin expanded 70bps year-over-year to 33% due to easing pressures on raw material costs. EBITDA decreased 3.8% yoy to Rs 4.2 billion. EBITDA margin contracted 180bps year-on-year to 10.3%, above our estimate of 8.5%, but below the consensus estimate of 10.6%. The EBITDA margin improved 250bps QoQ mainly due to the recovery in the margin of the Cables segment after the liquidation of high-cost inventory. Contribution margins expanded across all segments due to stable commodity (RM) prices during the first half of 3QFY23. Consequently, the PAT decreased by 7.2% yoy to Rs 2.8 billion. The final result was above our estimate by 25%, but below the consensus estimate by 1.8%. Management noted that muted B2C demand affected consumer-facing businesses. Furthermore, RM cost volatility started to increase starting in the second half of 3QFY23. Margins at Lloyds are expected to improve from 4QFY23 as high-cost inventory depletes. We believe that while there may be short-term issues on the margin front, the medium-term outlook remains strong as efforts to build the brand at Lloyds are likely to pay off. We have modified our figures marginally and continue to hold a BUY on Havells with a revised price target (TP) of Rs 1,415 (previous Rs 1,475) based on 50 times 24E Sep EPS.”

Disclaimer: The opinions and recommendations made above are those of individual analysts or brokerage firms, and not of the Mint. We advise investors to consult with certified experts before making any investment decision.

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