27 July 2020
1QFY21 Results Update | Sector: Capital Goods
Havells India
Estimate change
TP change
Rating change
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CMP: INR595
TP: INR560 (-6%)
Neutral
Strong show, but cost-cutting measures unlikely to sustain
June exit run-rate in positive territory; outlook remains hazy
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Financials & Valuations (INR b)
Y/E Mar
2020 2021E
Sales
94.3
85.0
EBITDA
10.3
9.3
PAT
7.3
5.5
EBITDA (%)
10.9
10.9
EPS (INR)
11.7
8.8
EPS Gr. (%)
(6.9) (25.0)
BV/Sh. (INR)
68.8
74.4
Ratios
Net D/E
(0.2)
(0.2)
RoE (%)
17.0
11.8
RoCE (%)
16.2
11.8
Payout (%)
87.5
36.0
Valuations
P/E (x)
50.8
67.7
P/BV (x)
8.7
8.0
EV/EBITDA (x)
35.2
39.1
Div Yield (%)
1.4
0.4
FCF Yield (%)
1.2
0.4
HAVL IN
625
372.6 / 5.1
765 / 447
-6/4/-15
1169
2022E
107.0
12.8
8.3
12.0
13.3
51.5
82.9
(0.3)
16.1
15.4
36.0
44.7
7.2
27.7
0.7
2.2
While revenue decline of 45% YoY was in line with our expectations,
aggressive cost rationalization measures led to a strong beat in earnings. Ad
spends stood at INR60m (0.4% of sales) in 1QFY21 v/s INR1.4b (5% of sales)
in 1QFY20. Employee costs were also lower by 27% YoY on account of
certain voluntary actions, which should normalize from 2QFY21. As demand
recovers, we expect the large part of these cost elements to scale back.
Havells’ core portfolio witnessed 4% YoY growth in June, while Lloyd was up
8% YoY.
Overall, demand for B2C products grew by 12% YoY in Jun’20, a
key positive.
However, the outlook remains hazy due to the local
lockdowns; hence, the management appears cautious on extrapolating the
June run-rate to the coming quarters. The results of peers suggest that with
a demand level of 80–85% v/s last year in July,
Havells is likely witnessing
market share gains across key categories.
Factoring cost savings in 1QFY21, we increase our FY21/FY22 EPS estimates
by 14%/4%. Our FY20–22E revenue/EBITDA/adj. PAT CAGR stands at
7%/12%/7%. The deterioration in working capital was disappointing, but this
should normalize in the coming quarters. Maintain
Neutral,
with TP of
INR560 (earlier: INR515) as we await a better entry point.
Revenue declined 45% to INR14.8b and was in line with our expectation.
EBITDA declined 53% to INR1.3b and was 82% above our expectation. The
EBITDA margin came in at 8.8% v/s our expectation of 5%. Adj. PAT came in
at INR633m, a strong beat v/s our expectation of INR219m.
Segmental highlights: (a)
HAVL’s core portfolio revenue declined 43% YoY in
1QFY21 and was 5% below our expectation – Cables and Wires (-41% YoY),
Switchgears (-44% YoY), Lighting (-45% YoY), ECD (-46% YoY), and Others (-
36% YoY).
(b)
Lloyd’s revenues declined 53% YoY to INR3b (v/s our
expectation of INR2b).
The working capital requirement was higher at the end of 1QFY21 due to a
reduction in creditors’ days as the level of production was low and the
company made payments for previous supplies. With factories fully
operational and supplies inching back to pre-COVID-19 levels, management
expects the working capital situation to normalize going ahead.
~70% of Havells’ sales are toward the B2C channel, which has shown better
traction. Overall, demand for B2C products grew by 12% YoY in Jun’20.
Channel inventory is now lower than before as channels have become
cautious and are working with optimum inventory. The
intensity of recovery
has been slower in the second half of July due to intermittent lockdowns.
Commercial Papers (CPs) are being raised at lower rate and are very short
term. CPs would substitute the short-term loans on the balance sheet.
Lloyd revenue surprises; ad spend cuts drive earnings surprise
Shareholding pattern (%)
As On
Promoter
DII
FII
Others
Jun-20 Mar-20 Jun-19
59.5
59.5
59.5
9.9
8.5
4.8
22.0
23.1
27.0
8.7
8.9
8.7
Key highlights from management commentary
FII Includes depository receipts
Nilesh Bhaiya – Research Analyst
(Nilesh.Bhaiya@MotilalOswal.com)
Pratik Singh – Research Analyst
(Pratik.Singh@MotilalOswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
 Motilal Oswal Financial Services
Havells India
Valuation and view
Factoring cost savings in 1QFY21, we increase our FY21/FY22 EPS estimates by
14%/4%. Our FY20–22E revenue/EBITDA/adj. PAT CAGR stands at 7%/12%/7%. The
deterioration in working capital was disappointing, but this should normalize in the
coming quarters. Maintain
Neutral,
with TP of INR560 (42x Mar’22E EPS, 10%
discount to past 5 year 1-yr forward average trading multiple and in-line with past 7
year average).
Quarterly Performance
Y/E March
Sales
Change (%)
Adj EBITDA
Change (%)
Adj EBITDA margin (%)
Depreciation
Interest
Other Income
Extra-ordinary Items
PBT
Tax
Effective Tax Rate (%)
Reported PAT
Change (%)
Adj PAT
Change (%)
Segmental Performance
Y/E March
1Q
Sales
Switchgear
Cables & Wires
Consumer Durable
Lighting & Fixtures
Lloyd Electric
% YoY
Switchgear
Cables & Wires
Consumer Durable
Lighting & Fixtures
Lloyd Electric
Profit Contribution
Switchgear
Cables & Wires
Consumer Durable
Lighting & Fixtures
Lloyd Electric
Contribution Margin (%)
Switchgear
Cables & Wires
Consumer Durable
Lighting & Fixtures
Lloyd Electric
3,419
7,785
5,616
2,504
6,520
(9.0)
3.8
11.4
(3.1)
(7.9)
830
845
823
357
82
24.3
10.9
14.7
14.2
1.3
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
1Q
27,127
4.5
2,781
-10.9
10.3
470
47
395
-
2,659
898
33.8
1,761
-16.3
1,761
-16.3
FY20
FY21E
FY20 FY21E MOSL
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1QE
22,305 22,699 22,161 14,791 20,800 23,900 25,509 94,292 85,000 14,300
1.8 -10.2 -19.5 -45.5
-6.7
5.3
15.1
-6.3
-9.9 -47.3
2,350 2,690 2,453 1,309 2,364 2,780 2,811 10,274 9,264
717
-10.5
-8.6 -22.1 -52.9
0.6
3.4
14.6 -13.2
-9.8 -74.0
10.5
11.8
11.1
8.8
11.4
11.6
11.0
10.9
10.9
5.0
532
553
625
604
625
625
665 2,179 2,519
625
51
53
46
167
150
100
83
197
500
50
290
239
195
322
250
250
285 1,120 1,107
250
-
-
-
-
-
-
-
-
-
-
2,058 2,324 1,977
860 1,839 2,305 2,348 9,017 7,352
292
255
329
205
226
463
580
581 1,687 1,850
73
12.4
14.2
10.4
26.3
25.2
25.2
24.8
18.7
25.2
25.2
1,803 1,995 1,772
633 1,376 1,725 1,767 7,330 5,501
219
0.9
0.9 -11.7 -64.0 -23.7 -13.5
-0.3
-6.9 -25.0 -87.4
1,803 1,995 1,772
633 1,376 1,725 1,767 7,330 5,501
219
0.9
0.9 -11.7 -64.0 -23.7 -13.5
-0.3
-6.9 -25.0 -87.4
(INR m)
Var.
3.4%
82.5%
194.3%
189.9%
189.9%
(INR m)
FY20
2Q
NA
NA
NA
NA
NA
3Q
NA
NA
NA
NA
NA
4Q
3,027
6,823
4,177
2,343
4,579
(25.9)
(24.0)
(21.7)
(38.6)
(14.0)
670
666
560
329
85
22.1
9.8
13.4
14.0
1.9
1Q
1,902
4,611
3,017
1,380
3,062
(44.4)
(40.8)
(46.3)
(44.9)
(53.0)
291
366
370
29
64
15.3
7.9
12.3
2.1
2.1
644
675
798
250
(150)
23.0
9.0
14.5
10.0
(10.0)
800
863
943
405
(270)
25.0
11.5
14.5
13.5
(10.0)
740
797
730
361
356
23.9
10.8
14.6
13.8
6.2
FY21E
2Q
2,800
7,500
5,500
2,500
1,500
3Q
3,200
7,500
6,500
3,000
2,700
4Q
3,098
7,389
4,983
2,620
5,738
27 July 2020
2
 Motilal Oswal Financial Services
Havells India
Exhibit 1: Havells’ (ex-Lloyd) revenue declines for 3
rd
consecutive quarter…
Havells (ex-Lloyd)
9% 7%
14% 18%
22%
28% 29%
14% 9%
6%
60%
30%
0%
-9% -21%
-43%
-30%
-60%
Exhibit 2: …led by decline across product categories
Cable and wires
Lighting and fixtures
Switchgears
Electrical consumable durables
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 3: Havells’ (ex-Lloyd) revenue trend (INR b)
Havells (ex-Lloyd) revenue (INR b)
22.1
11.7
11.0
3.8
12.8
9.6
Growth (%)
20.8
Exhibit 4: Havells’ (ex-Lloyd) EBITDA margin trend
Havells (ex-Lloyd) EBITDA margin
13.8
13.9
13.5
13.4
13.9
13.2
13.5
14.2
13.8
78
(4.5)
72
(8.2)
87
12.6
47
52
54
61
67
82
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 5: Lloyd’s revenue trend (INR b)
Lloyd revenue (INR b)
31.2
Growth (%)
53.8
Exhibit 6: Lloyd’s EBITDA margin trend (%)
8.0
5.3
2.5
Lloyd EBITDA margin
(14.3)
(18.3)
13
FY21E
20
FY22E
FY18
FY19
(2.1)
(5.1)
FY20
FY21E
FY22E
14
FY18
19
FY19
16
FY20
Source: MOFSL, Company
Source: MOFSL, Company
27 July 2020
3
 Motilal Oswal Financial Services
Havells India
Exhibit 7: Overall revenue trend (INR b)
Overall revenue (INR b)
32.7
23.7
11.7
11.0
12.8
3.8
(6.3)
47
52
54
61
81
101
94
(9.9)
85
107
Growth (%)
25.9
Exhibit 8: Blended margin trend (%)
Blended EBITDA margin
13.8 13.5 13.9 13.4
12.9
12.6
11.8
10.9 10.9
12.0
Source: MOFSL, Company
Source: MOFSL, Company
1QFY21 conference call highlights
Demand outlook
In Havells’ core portfolio, May reported 60% sales against last year (LY),
whereas
June surpassed LY sales by 4%.
Lloyd achieved ~80% revenues against LY in May’20,
whereas growth in June
was 8% over LY.
Switchgears saw 70% of sales from the consumer/residential channel and the
remaining 30% from the industrial channel.
70% of Havells’ product portfolio is B2C and the rest is B2B + B2G. B2C has
shown better traction.
The B2C portfolio grew by 12% YoY in Jun’20.
The stock level in trade currently is lower than pre-COVID-19 levels. Pent-up
demand could have been a factor in June.
Market share gains are likely to have accrued from the unorganized sector on
the back of pent-up demand in June’20.
Management is unsure of whether June’20 demand levels are sustainable, with
the possibility of extended lockdown in local areas. Havells would monitor sales
on a monthly basis before settling down on a particular trend.
The western region is taking more time to bounce back, with cities such as
Mumbai, Pune, and Nagpur lagging behind in terms of demand recovery. In the
eastern region, recovery in Kolkata is slower than in other states. In the
northern region, recovery in Delhi is slow v/s other states.
Lloyd
Incremental capex would be limited to INR400–600m.
Post localization, Lloyd has witnessed market share gains in the CY.
Other takeaways
If all supplies from China are stopped as of date, the risk to revenues for the
current year would be limited to 5% of sales.
The reason for raising Commercial Papers (CPs) worth INR5b: Havells had taken
loans in 1QFY21 to maintain liquidity due to the fear of COVID-19-led disruption.
The company is raising its short-term CPs to replace this high-cost debt. This is a
very short duration loan and would be repaid in due course of time.
27 July 2020
4
 Motilal Oswal Financial Services
Havells India
Cost levers: a)
Many cost items would come back once revenue stabilizes.
However, a part of cost reductions could sustain, such as travel expenses and
marketing expenses based on new media avenues.
b)
Employee costs stood
lower in 1QFY21 due to certain voluntary actions. These costs are expected to
increase from hereon, but would still be lower on a YoY basis on account of
employee rationalization in FY20.
The online channel is likely to see strong growth. The company expects to
maintain the offline channel’s similar market share for the online market.
Havells would invest more in channel expansion in the rural areas.
The management has not witnessed any trend of downtrading thus far.
Earnings change and valuation
Change in estimates:
Factoring cost savings in 1QFY21, we increase our
FY21/FY22 EPS estimates by 14%/4%.
Our FY20–22E revenue/EBITDA/adj. PAT CAGR stands at 7%/12%/7%.
Deterioration in working capital was disappointing, but this should normalize in
the coming quarters. Maintain
Neutral,
with TP of INR560 (42x Mar’22E EPS,
10% discount to past 5 year 1-yr forward average trading multiple and in-line
with past 7 year average).
Exhibit 9: We increase our FY21/FY22E EPS by 14%/4%
Earnings Change
(INR m)
Revenue
EBITDA
EBITDA margin
Adj. PAT
Old
FY21E
FY22E
81,000
1,05,000
8,059
12,222
9.9%
11.6%
4,824
8,050
New
FY21E
FY22E
85,000
1,07,000
9,264
12,824
10.9%
12.0%
5,501
8,333
Change
FY21E
FY22E
5%
2%
15%
5%
0.9%
0.3%
14%
4%
Source: MOFSL, Company
27 July 2020
5
 Motilal Oswal Financial Services
Havells India
Financials and valuations
Income Statement
Y/E March
Net Sales
Change (%)
EBITDA
% of Net Sales
Depreciation
Interest
Other Income
PBT
Tax
Rate (%)
Extra-ordinary Inc.(net)
Reported PAT
Change (%)
Adjusted PAT
Change (%)
2018
81,386
32.7
10,493
12.9
1,395
240
1,170
10,028
3,022
30.1
119
7,125
32.2
7,006
17.4
2019
1,00,677
23.7
11,838
11.8
1,494
161
1,278
11,461
3,588
31.3
0
7,873
10.5
7,873
12.4
2020
94,292
-6.3
10,274
10.9
2,179
197
1,120
9,017
1,687
18.7
0
7,330
-6.9
7,330
-6.9
2021E
85,000
-9.9
9,264
10.9
2,519
500
1,107
7,352
1,850
25.2
0
5,501
-25.0
5,501
-25.0
2022E
1,07,000
25.9
12,824
12.0
2,699
200
1,211
11,136
2,803
25.2
0
8,333
51.5
8,333
51.5
(INR m)
2023E
1,19,355
11.5
14,443
12.1
2,879
200
1,557
12,921
3,252
25.2
0
9,669
16.0
9,669
16.0
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Loans
Deferred Tax Liability
Capital Employed
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
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
2018
625
36,766
37,392
1,080
2,070
40,541
34,113
6,799
27,314
241
955
36,905
16,217
3,254
15,262
0
2,173
24,873
16,340
6,754
1,780
12,032
40,541
2019
626
41,297
41,922
945
3,168
46,035
34,027
4,989
29,038
2,327
17
39,875
19,190
4,242
12,877
0
3,566
25,222
15,601
7,264
2,358
14,653
46,035
2020
626
42,422
43,048
405
2,865
46,318
40,479
6,985
33,494
861
16
36,107
18,719
2,489
11,069
0
3,830
24,160
14,141
7,564
2,456
11,947
46,318
2021E
626
45,943
46,569
405
2,865
49,839
43,479
9,504
33,975
861
16
33,575
16,874
2,244
11,005
0
3,453
18,589
9,315
6,818
2,456
14,986
49,839
2022E
626
51,276
51,902
405
2,865
55,172
46,479
12,202
34,277
861
16
45,715
21,242
2,824
17,303
0
4,346
25,697
14,658
8,583
2,456
20,018
55,172
(INR M)
2023E
626
57,464
58,090
405
2,865
61,360
49,479
15,081
34,398
861
16
54,465
23,694
3,150
22,772
0
4,848
28,380
16,350
9,574
2,456
26,085
61,360
27 July 2020
6
 Motilal Oswal Financial Services
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
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
Net Debt/Equity (x)
2018
11.4
11.2
17.3
13.4
59.8
3.5
37.6
4.6
53.1
44.3
34.1
4.4
10.0
0.6
18.7
17.7
26.1
15
73
73
2.0
-0.4
2019
12.6
12.6
12.3
15.0
67.0
4.0
38.3
3.7
47.3
39.7
30.4
3.6
8.9
0.7
18.8
17.3
21.4
15
70
57
2.2
-0.3
2020
11.7
11.7
-6.9
15.2
68.8
8.5
87.5
4.0
50.8
39.2
35.2
3.8
8.7
1.4
17.0
16.2
18.7
10
72
55
2.0
-0.2
2021E
8.8
8.8
-25.0
12.8
74.4
2.6
36.0
4.4
67.7
46.4
39.1
4.3
8.0
0.4
11.8
11.8
13.0
10
72
40
1.7
-0.2
2022E
13.3
13.3
51.5
17.6
82.9
4.0
36.0
3.5
44.7
33.8
27.7
3.3
7.2
0.7
16.1
15.4
20.0
10
72
50
1.9
-0.3
2023E
15.5
15.5
16.0
20.1
92.8
4.6
36.0
3.1
38.5
29.7
24.2
2.9
6.4
0.8
16.6
16.0
22.4
10
72
50
1.9
-0.4
Cash Flow Statement
Y/E March
PBT before EO Items
Add : Depreciation
Interest
Less : Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
(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
2018
10,028
1,395
-249
2,450
-2,556
11,281
-15,888
-4,607
4,511
-11,377
147
-901
197
2,632
-3,583
-3,679
19,375
15,262
2019
11,468
1,494
-728
2,469
4,639
5,126
-4,996
130
710
-4,287
135
-209
134
3,016
-3,224
-2,385
15,262
12,877
2020
9,216
2,179
-535
2,398
215
8,248
-3,592
4,655
625
-2,968
313
-937
52
6,413
-7,088
-1,808
12,877
11,069
2021E
7,352
2,519
-607
1,850
3,104
4,309
-3,000
1,309
1,107
-1,893
0
0
500
1,980
-2,480
-64
11,069
11,005
2022E
11,136
2,699
-1,011
2,803
-1,266
11,287
-3,000
8,287
1,211
-1,789
0
0
200
3,000
-3,200
6,297
11,005
17,303
(INR m)
2023E
12,921
2,879
-1,357
3,252
597
10,593
-3,000
7,593
1,557
-1,443
0
0
200
3,481
-3,681
5,470
17,303
22,772
27 July 2020
7
 Motilal Oswal Financial Services
Havells India
NOTES
27 July 2020
8
 Motilal Oswal Financial Services
Havells India
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
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 Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, 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.
MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are available on
www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading
Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity
& Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository
Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory &
Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are available on the
website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should
be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant
banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from
MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or
use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong
Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act"
and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and
investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is intended for
distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as "major institutional
investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which this document
relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration provided by Rule
15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange Commission ("SEC") in order
to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities
International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
services license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and
Paragraph 11 of First Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in
respect of any matter arising from, or in connection with this report/publication/communication. This report is distributed solely to persons who qualify as “Institutional Investors”, of
which some of whom may consist of "accredited" institutional investors as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore (“the
SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
27 July 2020
9
 Motilal Oswal Financial Services
Havells India
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company
- received compensation/other benefits from the subject company in the past 12 months
- other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies)
discussed herein or act as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
Terms & Conditions:
This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of
MOFSL. The report is based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature.
The information is obtained from publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty,
representation of warranty, express or implied, is made as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The
report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial
instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
Disclaimer:
The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed,
in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose
and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing in this report
constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities
discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives,
financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document
should make such investigations as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including
the merits and risks involved), and should consult its own advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be
suitable for all investors. Certain transactions -including those involving futures, options, another derivative products as well as non-investment grade securities - involve substantial
risk and are not suitable for all investors. No representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions
contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as
endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make modifications and
alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from time to time, effect
or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to perform investment
banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a separate, distinct and
independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of information that is already
available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the
views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other
person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of
or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject
MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category
of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. Neither the Firm, not its directors,
employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may
arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its affiliates or employees from, any
and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold
MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person accessing this information due to any
errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263; Website
www.motilaloswal.com.CIN
no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth Management
Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is a distributor of
Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. which is a
group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL. Research & Advisory
services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no assurance or guarantee
of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance Officer: Name: Neeraj
Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
27 July 2020
10