BSE SENSEX
32,802
S&P CNX
10,118
Havells India
CMP: INR507
TP: INR590(+16%)
Upgrade to Buy
Expanding share in the electrical sector in India
Entry into durables adds another leg of growth
6 December 2017
Update | Sector: Capital Goods
Stock Info
Bloomberg
Equity Shares (m)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
M.Cap. (INR b)
M.Cap. (USD b)
Avg Val, INRm
Free float (%)
HAVL IN
625.0
564/311
4/0/24
316.3
4.9
656
38.4
Financials Snapshot (INR b)
2018E 2019E 2020E
Y/E Mar
Net Sales
83.2 100.4 114.7
EBITDA
10.7 13.6
15.8
Adj PAT
7.2
8.9
10.5
Adj EPS (INR)
11.5 14.3
16.8
EPS Gr. (%)
20.5 23.9
17.7
BV/Sh(INR)
59.0 67.2
76.8
RoE (%)
19.5 21.2
21.9
RoCE (%)
19.7 21.9
22.8
Payout (%)
42.8 42.8
42.8
Valuations
P/E (x)
44.3 35.7
30.4
P/BV (x)
8.6
7.6
6.6
EV/EBITDA (x)
29.0 22.5
19.0
Div Yield (%)
0.8
1.0
1.2
Shareholding pattern (%)
As On
Sep-17 Jun-17 Sep-16
Promoter
61.6
61.6
61.6
DII
3.5
3.2
2.9
FII
25.7
26.3
26.7
Others
9.3
8.9
8.8
FII Includes depository receipts
Stock Performance (1-year)
Havells India
Sensex - Rebased
600
525
450
375
300
Continuously entering new categories to drive growth:
Havells India (HAVL) has
consistently identified and entered new product categories over the years (see
Exhibit 1). Some of the 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 EHV cables. The recent acquisition of Lloyd gives HAVL a
strong foothold in the fast growing durables segment – the aim is to double
revenue in the next three years through new product launches, expansion of
existing product portfolio and increased channel penetration (in talks with large
format stores to stock Lloyd products).
GST rate cuts to accelerate market share gains from the unorganized sector:
The
government has cut GST rates across electrical categories from 28% to 18% and
this should accelerate the shift towards the organized sector, especially in
categories like cables/wires, fans, switches and lighting, where the share of the
unorganized segment is high. Implementation of the E-waybill from April 2018
would further accelerate this transition. Media reports suggest a cut in rates from
28% to 18% for durables as well – this would have a positive impact on Lloyd’s sales
in air-conditioners for the upcoming summer season in 2018.
EESL threat recedes; LED bulb prices stabilizing:
The market has been concerned
on the impact of EESL’s bulk sourcing on prices of fans, lighting products and
durables (air conditioners, washing machines and refrigerators). Our recent
meeting with EESL indicates that its focus has now shifted to electric vehicles,
smart meters and solar rooftops from fans and lighting (LED bulbs, streetlights).
This is positive for electrical companies like HAVL that can leverage their strong
channel relationships to drive sales. We believe the change in EESL’s stance is
driven by (a) installation issues with durables unlike LED lamps, which are ‘plug and
play’, (b) regular servicing requirements of durables, and (c) high cost of raising
product awareness with the customer.
Margins revert to normalized levels post demonetization/GST disruption:
HAVL’s
EBITDA margin had dipped to 12.7% in 3QFY17, as discounts/schemes were offered
to counter the impact of demonetization. EBITDA margin further dipped to 10% in
1QFY18 on GST-related destocking and delays in passing on RM cost hikes to the
channel. With all the demonetization-related schemes being rolled back and price
hikes taken, EBITDA margin has bounced back to 15.8% in 2QFY18 and should
sustain at the historical 13.5-14%. We expect sales growth to accelerate, led by (a)
lighting, consumer durables, and Lloyd Electric, and (b) market share gains in
cables/wires and switches.
Upgrade to Buy; retain TP at INR590 (35x Dec’19 EPS):
We expect HAVL to report
21% EPS CAGR over FY17-20, with EBITDA margin expanding 40bp to 13.8%. With
the Lloyd acquisition, HAVL has turned itself into a complete electricals and
durables behemoth, and is well positioned to tap into the under-penetrated Indian
market. Our target price is based on 35x Dec’19 EPS (in line with Crompton
Consumer Electricals).
Ankur Sharma – Research analyst
(Ankur.VSharma@MotilalOswal.com); +91 22 6129 1556
Amit Shah – Research analyst
(Amit.Shah@MotilalOswal.com); +91 22 6129 1543
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.

Havells India
Continously entering new categories to drive growth
Entry into durables via Lloyd opens up another large opportunity
Successful entry into new categories over the years
HAVL has consistently been able to identify and enter new product categories over
the years. Some of the key categories it has successfully entered include lighting in
2003, premium fans in 2005, water heaters in 2010, REO switches in 2012, air
coolers in 2014, and the re-launch of the
Standard
brand in 2016.
Exhibit 1: New product introductions by Havells over the years
Description
Lighting – GLS
Fans - premium category
Motors
Lighting – CFL
Electric water heaters
Kitchen and Home appliances
REO Switches
Pumps
Air Coolers
Promptec
STANDARD Relaunch
REO - Bliss (Modular Switches)
Solar Power Systems - Home lighting, Pumps, Streetlights
Crabtree - home automation and control
REO – Armor (Switchgear)
Personal Grooming (Shavers, Trimmers, Hair Straighteners)
Water Purifiers
Lloyd Electric – Air- conditioners, TV and Washing Machines
Super premium Fans - Octet(8 blades), Wi-fi controlled and BLDC
CRABTREE - Switch Plates
EHV Cables
Year
2003
2005
2008
2009
2010
2011
2012
2013
2014
2015
2016
2016
2016
2016
2017
2017
2017
2017
2017
2017
2017
Source: MOSL, Company
HAVL has done very well in each of these categories. It has taken share from the
incumbents and is already among the top five players. We highlight its successes:
In water heaters, HAVL has grown in size to one of the top-5 players in the
country. Water heater sales were at INR2b in FY17 and HAVL has identified this
as a key product category for growth – given the seasonality of sales, it would
see primary sales for the upcoming winter season and balance out the weak
sales for fans in 2Q/3Q. Havells has already taken a 15% share in the ~INR15b
water heater market and has aggressively stepped up advertisement spends to
further increase its market share in this segment with the current winter season
– its Adonia range of water heaters have a color changing LED which indicates
the temperature of the water, are 5 star rated for highest energy efficiency, a
digital temperature display.
6 December 2017
2

Havells India
Exhibit 2: Adonia color changing water heaters from Havells
Source: Company, MOSL
HAVL is the market leader in lighting fixtures and among the top-5 players in the
overall lighting market in India. Its focus is on LED lighting, which currently
contributes 82% of sales in fixtures (~85% of lighting sales). While fixtures are
commonly used in commercial establishments, their usage is also increasing in
the residential segment as well – Havells is uniquely positioned as the only
Indian manufacturer of fixtures with its plant at Neemrana. It has focused on
fixtures vs. selling only the LED lamps as these earn better margins.
Bajaj Electricals, Havells, 4%
4%
Crompton, 5%
Surya Roshni, 6%
Others, 55%
Philips, 26%
Exhibit 3: Market share in lighting market in India (FY17)
Source: MOSL, Company
6 December 2017
3

Havells India
HAVL is the market leader in premium fans – its strategy to focus on premium
fans has enabled it to beat established incumbents like Crompton, Bajaj Electric
and Orient Electricals to take ~25% share in premium fans. To further cement its
position, Havells has recently launched a range of Super premium Fans which
includes: a) Octet (8 blades), b) W-ifi controlled and blue tooth enabled fans
(Futuro) and c)BLDC fans (Efficiencia) which are 50% more energy efficient than
normal 75W fans.
Exhibit 5: Havells Enticer range of Dust resistant fans
Exhibit 4: Havells Octet Fans with 8 blades
Source: Company, MOSL
Source: Company, MOSL
Exhibit 6: Havells Futuro Fans with blue tooth technology
Exhibit 7: Fan market share in India (FY17) – Havells is the
leader in premium fans
Others,
28%
Khaitan
Electricals -
has gone
into BIFR,
1%
Orient fans,
20%
Crompton
Greaves,
27%
Havells,
16%
Bajaj
Electricals,
9%
Source: Company, MOSL
Source: Company, MOSL
HAVL launched the REO range of switches (non-modular) and switchgear to
cater to the affordable housing segment – it targets annual sales of INR1b from
REO Bliss
and INR2b from
REO Armor
(switchgear). Note that Havells has
historically been strong in this segment with a 27-28% share in the switchgear
segment and ~14-15% share in the switches segment. The launch of the REO
brand is targeted towards the affordable housing segment which is expected to
drive the next leg of growth in housing.
Exhibit 8: REO switches to target the affordable housing segment
Source: MOSL, Company
6 December 2017
4

Havells India
The
Standard
brand has been re-launched, with Alia Bhatt as brand ambassador
– the aim is take sales from this brand to INR5b in three years and to INR10b by
FY20. The
Standard
brand is strong in South India and will be at similar price
points as
Havells.
With this launch, Havells has segmented the market into
three: the Standard band which targets the youth with its tagline “Young
Energy’, Crabtree which targets the premium end of the market with its tagline
“What a life” and Havells which is for mass premium segment with its tagline
“Making a difference”.
Exhibit 9: Havells has re-launched the STANDARD brand with Alia Bhatt
Source: Company, MOSL
HAVL launched personal grooming products in 2017 and aims to be among the
top-3 in this category with a target of 25% of the market. The range is based on
the four pillars of style, safety, durability and convenience.
6 December 2017
5

Havells India
Exhibit 10: Havells personal care range
Source: Company, MOSL
Acquisition of Lloyd helps foray into consumer durables segment
The acquisition of Lloyd has helped HAVL to foray into the consumer durables
business, which is currently estimated at INR830b and is expected to witness
double-digit growth over the next few years, given low penetration levels, increasing
urbanization, and an aspirational and expanding middle class. The urban market
accounts for 67% of the consumer durables sector.
The acquisition of Lloyd makes HAVL a credible consumer durables company along
with a very strong portfolio in electricals. The size of the consumer durables industry
(air conditioners, TVs, washing machines, fridges) would be ~INR830b (see table
below) versus the current size of the consumer electricals segment at INR681b. The
consumer durables market is dominated by the Koreans (LG, Samsung) along with a
few Indian names like Voltas and Blue Star.
Exhibit 11: Consumer durables industry size (INR m)
Name of the segment
Air conditioners
Washing machine
Fridges
Television
Total
Value (INR m)
100,000
122,000
93,400
514,000
829,400
Source: MOSL, Industry Research
Exhibit 12: Penetration of product categories in India
Product
Fans
Water heater
Mixer-Grinder
TV
Fridge
Air cooler
Washing Machine
Air conditioner
Penetration
80%
10%
35%
77%
33%
8-10%
13%
3-4%
Source: MOSL, Industry Research
6 December 2017
6

Havells India
Exhibit 13: Room air-conditioners to grow a 13% CAGR over FY17-20
Volumes (mn)
20% 20% 22%
7%
-14%
1.1
1.3
1.5
1.9
2.0
2.5
3.3
2.9
-5%
25%
31%
3%
Industry gr. (% )
23%
12%
30%
10%
15% 15%
15%
2.7
2.8
3.5
4.0
5.2
5.7
6.6
7.6
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20
Exhibit 14: Lloyd amongst the top 5 players in aircon (by volumes)
Samsung, 8
Others, 6
Voltas, 21
Blue Star, 12
LG, 16
Hitachi, 11
Lloyd Electric, 13
Daikin, 13
Source: MOSL, Industry
Lloyd acquisition also gives access to a large distribution channel and brand
As at the end of FY17, Lloyd had a network of over 10,000 direct and indirect dealers
spread across India, 34 sales branches, 485 authorized service centers, and 31
company-owned service centers. Lloyd currently enjoys ~14% market share in the
room AC segment and is among the top 4-5 players in the room AC market; it has
seen impressive growth over the last three years to touch 14% market share in FY17.
~75% of sales are from ACs and the balance from TVs and washing machines.
Exhibit 15: Service centers of key air conditioner players in India
Name of the company
Voltas
Blue Star
Hitachi home and Life
Daikin
LG
Carrier
Lloyd Electric
Panasonic
Company
Voltas
Blue Star
Daikin
Videocon
Hitachi
Lloyd Electric
Symphony
Carrier Midea
Nos (FY16)
200
25
41
75
194
175
485
100
Touch points
>14,000
3800
4000
7000
4000
>10,000
23,400
3,200
Source: MOSL, Company
Exhibit 16: Dealer touch points of various players in India
6 December 2017
7

Havells India
HAVL acquired Lloyd Electric in February 2017 for a consideration of INR16b and this
acquisition has given it access to the durables segment in the country. Lloyd has a
presence in air conditioners (75% of FY17 sales), TVs and washing machines. HAVL
aims to double the sales of Lloyd in the next three years by (a) introducing new
products (planning to launch refrigerators), (b) expanding the existing product
portfolio of ACs, sashing machines and LED TVs, and (c) increasing dealer network
and targeting large format stores where Lloyd was not present earlier.
Exhibit 17: Lloyd Electric sales over the next few years
Lloyd Electric sales(INRm)
21,250
15,000
28,103
24,438
Target is to double Lloyd Electric sales in the next three years
FY18E
FY19E
FY20E
FY21E
Source: MOSL, **FY18 sales excluding April. 2017
Exhibit 18: Lloyd range of air conditioners –Mr. Amitabh Bachhan is the brand ambassador
Source: Company, MOSL
6 December 2017
8

Havells India
GST rate cuts to accelerate shift to organized sector
Likely cut in GST rates on durables also on the cards
GST rates cuts to accelerate shift to organized sector
The government has recently cut GST rates across electrical categories from 28% to
18% and this should accelerate the shift towards the organized sector, especially in
categories like cables/wires, fans, switches and lighting, where the share of the
unorganized segment is high. Implementation of E-waybill from April 2018 would
further accelerate this transition. Media reports suggest a cut in rates from 28% to
18% for durables as well – this would have a positive impact on Lloyd’s sales for the
upcoming summer season in 2018.
HAVL would be a key beneficiary of the recent GST rate cuts on electrical products
by the government. Incidentally, with GST rates in key categories being hiked to 28%
for fans and cables/wires, the share of unorganized trade had resurged. The cut in
rates to 18% would help the organized players take back share.
Exhibit 19: GST rates cut from 28% to 18% for electrical products
Description
Switches/Circuit breakers
Fans
Insulated Cables/Wires
CFL
Pumps
Water Heater
From
28%
28%
28%
28%
28%
28%
To
18%
18%
18%
18%
18%
18%
Source: MOSL, PIB website
Exhibit 20: Share of unorganized sector in electricals sales
Description
Fans
Lighting
Pumps
Domestic Switchgear
Industrial Switchgear
Cables and Wires
Switches
FY06
60%
75%
55%
60%
40%
55%
75%
FY10
40%
60%
45%
20%
20%
45%
50%
FY16
25%
40%
30%
<5%
20-25%
30%
40%
Source: MOSL, Industry
The scope for taking share is higher in categories like lighting, pumps, cables/wires
and switches, as the share of the unorganized segment is higher in these categories.
GST rates could be cut for durables too; advantage for Lloyd Electric
Media reports suggest that the GST Council, in its next meeting in January 2018 may
cut GST rate on durables from 28% to 18%. This would positively impact air
conditioners, washing machines, TVs and refrigerators – these are all key focus
segments for Lloyd Electric.
Assuming that the entire rate cut is passed on to end consumers, we would expect a
similar increase in end demand, assuming a price elasticity of 1x. Ahead of the
upcoming summer season, we believe this could be a big positive in terms of sales of
air conditioners, which account for 75-80% of sales for Lloyd Electric
.
6 December 2017
9

Havells India
EESL threat for the electricals sector recedes
LED prices stabilizing; limited impact on other durables
The market has been concerned on the impact of EESL’s bulk sourcing on prices of
fans, lighting products and durables (air conditioners, washing machines). EESL has
been successful in drastically reducing the procurement prices for LED lamps from
INR400 to INR40 and the street was of the view that a similar intervention in other
durables would hurt prices/margins for electricals players.
Exhibit 21: Earlier targets of distribution by EESL
Description
LED bulbs and 35m Streetlights
Agricultural pumps
Fans
Air conditioners
Total
Benefit
(INR b)
450
120
15
INR585
Units
(m)
770
10
44
1.8
1.8
Annually
(m)
257
3.3
14.7
0.6
0.6
% of
annual
market
20%
29%
12%
0.12
Source: EESL
Our recent meeting with EESL indicates that its focus has now shifted to electric
vehicles, smart meters and solar rooftops from fans and lighting (LED bulbs,
streetlights). This is positive for electricals companies like HAVL that can leverage
their strong channel relationships to drive sales.
LED lamps – to slowly exit the market, as prices below CFL lamps
EESL procured ~130m LED bulbs in FY17 while the industry did 270m, totaling to
400m lamps. The cheapest price offered in the tender was from Phillips, which
quoted INR38/unit. For FY18, EESL has targeted 150m bulbs, of which 60m is already
bought; it will buy the balance in the next few months. There are already enough
participants in the LED lamp market and prices are also down to ~INR40/unit in bulk
tendering. So, EESL will reduce focus in this segment. Moreover, prices in the
market/retail level are below INR100 for most brands and there is already enough
awareness of the product. So, EESL is happy to step back.
Durables (fans, ACs, tube lights) – rolled into program for central
government buildings
Post the successful implementation of the LED lamp program, EESL was looking at
new product categories like fans, air conditioners, tube lights and other durables as
the next areas for intervention. These have now been rolled into the ‘Building
Scheme’ and EESL is targeting central and state government buildings only. It has
identified 6,000 buildings, where these will be replaced. Within fans, the need is for
2m units, of which EESL has procured half; it will procure another 1m fans shortly.
The required 0.1m units of air conditioners have already been procured for these
buildings; so, EESL will not be procuring ACs in the near future.
We believe the change in EESL’s stance is driven by (a) installation issues with
durables unlike LED lamps, which are ‘plug and play’, (b) regular servicing
requirements of durables, and (c) high cost of raising product awareness with the
customer.
6 December 2017
10

Havells India
Margins revert to historical levels
Dealer schemes rolled back
HAVL’s EBITDA margin had dipped to 12.7% in 3QFY17, as discounts/schemes were
offered to counter the impact of demonetization. EBITDA margin further dipped to
10% in 1QFY18 (ex Lloyd Electric) on GST-related destocking and delays in passing on
RM cost hikes to the channel. With all the demonetization-related schemes being
rolled back and price hikes taken, EBITDA margin has bounced back to 15.8% in
2QFY18 and should sustain at the historical 13.5-14%. We expect sales growth to
accelerate, led by (a) lighting, consumer durables, and Lloyd Electric, and (b) market
share gains in cables/wires and switches.
Exhibit 22: EBITDA margin reverts to historical levels in 2QFY18; to sustain at 13.5-14%
EBITDA Margin(%)
13.1%
14.2%
13.8%
15.2%
13.7%
14.0%
12.7%
13.4%
9.3%
14.5%
Source: MOSL, Company
In 2QFY18, HAVL was able to pass on the higher RM costs and GST-related tax
changes to the end consumer. In wires/cables, it hiked prices to account for higher
copper prices and higher GST rate (which went up from 18% to 28%). In wires, prices
were hiked by 12-13%, and in cables, by 5-6%. The margin improvement witnessed
in the other product categories is primarily on roll back of dealer
incentives/schemes. From mid-November, prices of cables/wires have been cut, as
the GST rate has been bought down to 18%.
6 December 2017
11

Havells India
Mixed signs in the real estate market
Commercial property bottoming; residential property still downbeat
Commercial housing seeing a bottom; not so much for residential
The commercial and residential real estate markets are seeing divergent trends –
while there has been a bottoming out in commercial segment sales and a
corresponding fall in vacancy rates, residential sales are still to hit bottom.
Demonetization and RERA have delayed the recovery in residential unit sales.
Residential unit launches and sales continue to decline
After a weak 2HCY16, when demonetization pulled down residential sales and
launches by 46% and 23%, respectively, 1HCY17 has ushered in an eventful period.
The first two months of 1HCY17 saw consumers and the industry as a whole
grappling with the aftermath of demonetization. Thereafter, starting May 2017,
RERA was implemented – this led to developers redirecting efforts to RERA
compliance from new launches; therefore, the pace of launches slowed down in
1HCY17, with a 41% fall to 62,738 units and a 9% fall sequentially over 2HCY16.
Ahmedabad and Delhi were the worst hit, with launches falling by 79% and 73%,
respectively. Sales during 1HCY17 declined by 11% to 120,756 units and improved
11% sequentially compared to the demonetization period of 2HCY16.
Exhibit 23: Residential unit launches weak, as focus shifted to RERA compliance
485,000
Residential units launches
465,000
458,228
420,105
319,659
244,069
175,823
107,120
68,700
62,738
Source: Knight Frank** Top 8 cities in India
The government’s impetus on affordable housing in the residential market has led
to a surge in new launches in this segment. In our view, this focus on affordable
housing is a structural change and will a sustainable theme. The share of <INR2.5m
value homes has risen from 17% in 1HCY16 to 36% in 1HCY17.
Exhibit 24: Price-wise launch of new residential units
Value
<2.5m
2.5-5m
5-7.5m
7.5-10m
10-20m
>20m
1H16
17%
35%
22%
10%
10%
5%
2H16
20%
39%
20%
11%
6%
4%
1H17
36%
35%
15%
6%
8%
1%
Source: Knight Frank, **Top 8 cities in India
6 December 2017
12

Havells India
Exhibit 25: Housing loans still growing – driven by growth beyond Tier 1 cities
41%
Housing loan outstanding(INR trn)
YoY (%)
25%
19%
13%
1.7
2005
2.4
2006
3.0
2007
3.4
2008
12%
3.8
2009
13%
4.3
2010
5.1
2011
22%
16%
17%
18%
16%
21%
6.2
2012
7.2
2013
8.4
2014
9.9
2015
11.5
2016
13.9
2017
Source: RBI, MOSL
Commercial realty – vacancy rates at new lows
Office market fundamentals across the country remain strong, with vacancy levels
hitting a new low, as supply crunch shows little signs of abating. Consistently falling
since 1HCY12, the vacancy rates now stand at 12%. Lack of fresh office space is most
visible in the IT/ITES sector dominated markets of Bangalore, Pune and Hyderabad,
which have single-digit vacancy rates of 4%, 8% and 9% respectively.
Supply crunch has hurt transactions in the commercial property market, which
declined 10% in 1HCY17 compared to 13% growth a year ago. This 10% decline
translates into an 18.1msf of office space being absorbed across the top-6 cities in
the country in 1HCY17. A similar 5% decline in supply saw 18msf of office space
come into the market in 1HCY17.
Exhibit 26: Commercial property sales (mn sf.) bottomed out; vacancy rates falling
Commercial property sales
17.5%
18.0%
20.0%
19.2%
18.0%
Vacancy rate(%)
15.6%
15.0%
13.3%
13.0%
12.4%
38.2
CY10
38.6
CY11
30.5
CY12
35.2
CY13
38.6
CY14
41.1
CY15
20.2
1H16
20.4
2H16
40.6
CY16
18.1
1H17
Source: Knight Frank** Top 8 cities in India
6 December 2017
13

Havells India
Exhibit 27: Commercial property completions – flat YoY
45
Commercial property completion(mn sq ft)
42
35
38
36
19
10
40
30
18
Source: Knight Frank** Top 8 cities in India
Valuation and view
We apply a 35x 1 year forward multiple (in line with Crompton Consumer Electricals)
to obtain our target price – our target multiple is supported by a strong 21%
earnings CAGR over FY17-20, FY19 ROE/ROCE’s at 22% and strong free cash flow
generation. Key risks to our rating are a) delay in housing recovery, b) sharp rise in
raw material prices, and c) Sharp increase in competitive intensity due to entry of
new players in the durables segment.
Exhibit 28: Havells P/E chart (1 year forward)
P/E (x)
Min (x)
100.0
75.0
50.0
25.0
0.0
Avg (x)
+1SD
Max (x)
-1SD
Exhibit 29: Havells P/B chart (1 year forward)
P/B (x)
Min (x)
10.5
8.0
Avg (x)
+1SD
Max (x)
-1SD
77.2
40.3
25.3
10.4
9.6
38.1
5.5
3.0
0.5
6.8
5.3
8.1
7.9
3.9
1.5
Source: MOSL
Source: MOSL
6 December 2017
14

Havells India
Financials and Valuations
Income Statement (Consolidated)
Y/E March
Net Sales
Change (%)
Raw Materials
Staff Cost
Other Expenses
EBITDA
% of Net Sales
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Extra-ordinary Inc.(net)
Reported PAT
Change (%)
Adjusted PAT
Change (%)
2014
81,858
12.9
46,398
10,869
17,167
7,425
9.1
1,155
741
413
5,941
1,478
24.9
0
4,463
-23.3
5,410
26.1
2015
85,694
4.7
48,292
11,875
18,316
7,211
8.4
1,387
640
504
5,689
1,836
32.3
0
3,853
-13.7
5,159
-4.6
2016
53,783
-37.2
31,735
3,708
10,791
7,549
14.0
1,049
127
694
7,066
1,970
27.9
2,024
7,120
84.8
5,096
-1.2
2017
61,353
14.1
36,485
5,004
11,623
8,241
13.4
1,196
122
1,343
8,266
2,298
27.8
(578)
5,390
-24.3
5,969
17.1
2018E
83,240
35.7
52,025
6,555
13,984
10,675
12.8
1,314
250
850
9,962
2,769
27.8
0
7,192
33.4
7,192
20.5
2019E
100,407
20.6
62,754
7,211
16,868
13,573
13.5
1,398
250
800
12,726
3,818
30.0
0
8,908
23.9
8,908
23.9
(INR Million)
2020E
114,677
14.2
71,673
7,932
19,266
15,806
13.8
1,481
250
900
14,975
4,492
30.0
0
10,482
17.7
10,482
17.7
Balance Sheet (Consolidated)
Y/E March
Share Capital
Reserves
Net Worth
Loans
Deffered Tax Liability
Minority Interest
Capital Employed
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Goodwill
Curr. Assets
Inventory
Debtors
Cash & Bank Balance
Loans & Advances
Other Current Assets
Current Liab. & Prov.
Creditors
Other Liabilities
Provisions
Net Current Assets
Application of Funds
E: MOSL Estimates
2014
624
16,036
16,660
10,506
517
1
27,687
32,075
20,451
11,624
444
4,380
36,929
14,934
10,005
8,819
2,114
1,057
25,690
9,988
12,684
3,018
11,239
27,687
2015
622
17,557
18,180
4,191
434
1
22,808
30,298
18,469
11,829
383
3,581
32,519
13,663
6,232
7,775
1,723
3,127
25,504
8,338
13,645
3,521
7,015
22,808
2016
625
28,912
29,537
444
863
0
30,844
13,080
1,200
11,881
205
0
24,077
7,844
1,576
13,652
0
1,005
10,047
4,363
4,062
1,621
14,031
30,843
2017E
625
32,111
32,736
1,981
1,138
0
35,854
15,012
2,355
12,658
119
0
32,797
9,284
2,285
19,375
0
1,853
13,746
6,296
5,685
1,766
19,051
35,854
2018E
625
36,222
36,847
1,000
1,138
0
38,985
16,012
3,669
12,344
0
14,970
28,320
13,737
3,100
9,709
0
1,774
16,649
8,542
6,253
1,854
11,671
38,985
2019E
625
41,314
41,939
1,000
1,138
0
44,076
17,012
5,066
11,946
0
14,970
36,289
16,570
3,740
14,117
0
1,863
19,128
10,303
6,878
1,947
17,161
44,076
(INR Million)
2020E
625
47,306
47,931
500
1,138
0
49,568
18,012
6,548
11,464
0
14,970
44,511
18,925
4,271
19,360
0
1,956
21,378
11,767
7,566
2,044
23,134
49,568
6 December 2017
15

Havells India
Financials and Valuations
Ratios
Y/E March
Basic (INR)
Adjusted EPS
Growth (%)
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation (x)
P/Sales
P/E (standalone)
P/E (consolidated)
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors. (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
2014
7.2
8.7
26.1
10.5
26.7
3.0
49.1
2015
6.2
8.3
-4.7
10.5
29.1
2.9
57.6
2016
11.4
8.2
-1.2
9.8
47.3
4.0
88.5
5.9
62.5
62.5
51.8
39.8
5.6
10.8
0.8
32.5
19.2
33.2
45
67
45
3.0
0.6
28.4
17.0
38.8
27
58
36
3.8
0.2
17.3
19.3
52.1
11
53
30
1.7
0.0
2017E
8.6
9.6
17.1
11.5
52.4
3.5
42.8
5.2
53.4
53.4
44.4
36.0
4.8
9.7
0.7
18.2
18.2
56.6
14
55
37
1.7
0.1
2018E
11.5
11.5
20.5
13.6
59.0
4.2
42.8
3.8
44.3
44.3
37.4
29.0
3.7
8.6
0.8
19.5
19.7
32.0
14
60
37
2.1
0.0
2019E
14.3
14.3
23.9
16.5
67.2
5.2
42.8
1.6
35.7
35.7
30.9
22.5
3.0
7.6
1.0
21.2
21.9
40.6
14
60
37
2.3
0.0
2020E
16.8
16.8
17.7
19.2
76.8
6.1
42.8
1.4
30.4
30.4
26.6
19.0
2.6
6.6
1.2
21.9
22.8
47.4
14
60
37
2.3
0.0
Cash Flow Statement
Y/E March
PBT before EO Items
Add : Depreciation
Interest
Less : Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
EO Income
CF from Oper. incl. EO Items
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
CF from Investments
(Inc)/Dec in Net Worth
(Inc)/Dec in Debt
Less : Interest Paid
Dividend Paid
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
E: MOSL Estimates
2014
5,941
1,155
741
1,891
2,453
8,399
0
8,399
-1,424
6,975
0
-2,109
3
722
741
2,190
-2,206
4,084
4,736
8,820
2015
5,689
1,387
639
1,836
3,180
9,058
0
9,058
-1,531
7,528
0
-732
-198
-6,315
640
2,219
-9,372
-1,045
8,819
7,774
2016
7,066
1,045
127
1,970
-1,138
5,131
2,024
7,155
-922
6,233
-4,727
-2,069
9,177
-3,747
127
4,511
791
5,878
7,775
13,652
2017E
8,266
1,196
122
2,298
865
8,151
-578
7,573
-2,049
5,524
701
-1,348
640
1,537
122
2,557
-502
5,723
13,652
19,375
2018E
9,962
1,314
250
2,769
-2,449
6,307
0
6,307
-718
5,589
4,026
-11,662
0
-981
250
3,081
-4,312
-9,667
19,375
9,708
2019E
12,726
1,398
250
3,818
-1,081
9,474
0
9,474
-1,000
8,474
0
-1,000
0
0
250
3,816
-4,066
4,408
9,709
14,117
(INR Million)
2017E
14,975
1,481
250
4,492
-730
11,484
0
11,484
-1,000
10,484
0
-1,000
0
-500
250
4,491
-5,241
5,243
14,117
19,360
6 December 2017
16

Disclosures:
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, the Research Entity (RE) as defined in the Regulations, is engaged in the business of providing Stock
broking services, Investment Advisory Services, Depository participant services & distribution of various financial products. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed
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Havells India
Disclosure of Interest Statement
Analyst ownership of the stock
Havells India
No
A graph of daily closing prices of securities is available at
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Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring
Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id:
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Contact No.:022-30801085.
Registration details of group entities.: MOSL: SEBI Registration: INZ000158836 (BSE/NSE/MSE); CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser:
INA000007100. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS
(Registration No.: INP000004409) offers wealth management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal
Commodities Broker Pvt. Ltd. offers Commodities Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private
Equity products
6 December 2017
17