The shares of the leading Fast Moving Electrical Goods (FMEG) firm gained 2 percent to ₹ 1,571.70 per share on Wednesday after the company planned to launch kitchen appliance products.
On Wednesday, company shares were trading at ₹1,515.05 per share, down 1.67 percent from the previous close price. The company has a market capitalization of ₹94,945 crore.
According to the company’s exchange filing, Havells India Limited planned to expand its existing product portfolio with the introduction of kitchen appliances such as cooktops, hobs, chimneys, and other built-in appliances. The new venture is expected to bring benefits of synergies of business with its existing range of small domestic appliances.
The company intends to become a key player in the market, ranking among the top three, within the first three years of commencing operations. All products within its portfolio will be outsourced to cater to the domestic market, with the anticipated launch scheduled for May 2024
Havells India is India’s leading manufacturer of a wide range of industrial and consumer electrical goods. Last year, the company commissioned a new air conditioner plant in Sri City, Andhra Pradesh, and this year, the company is expanding its washing machine and cable capacities.
Following the expansion strategy, Goldman Sachs upgraded Havells’ rating from “neutral” to “buy” and set a target price of ₹1,660, up from ₹1,540. This represents a 10 percent upside from the Wednesday trading price of ₹1,513 per share.
Goldman Sachs predicts that Havells will experience a return to double-digit revenue growth starting in the March quarter, after two consecutive quarters of single-digit growth. The anticipated improvement in profit contribution from the Lloyd brand will boost clarity on profitability, leading to a rise in valuation.
CLSA added that Havells will achieve a market share of around 10 percent, it would lead to a share value of around Rs 45-70 a share
The company is developing a new cable manufacturing plant at Tumkur, which will be commissioned by the end-FY24. Havells currently supplies to more than 70
countries across various product categories, including air conditioners, cables, fans, and switchgear.
Havells is diversified into different business segments, in which the cable business accounts for 33 percent of overall revenue, switchgear accounts for 20 percent, and electrical consumer durables account for 19.5 percent of revenue.
Havells India Ltd. shares have gained 12 percent in the last six months and 24 percent in a year.
The company has experienced a yearly growth of 7 percent in its revenue, rising from ₹4,128 crore in Q3FY23 to ₹4,414 crore in Q3FY24. Meanwhile, the company’s net profit has slightly risen by 1.5 percent during the corresponding period, increasing from ₹284 crore to ₹288 crore.
Written by Omkar Chitnis
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