Capital Goods: Sector Update | 5 July 2017
India Electricals
Please refer our detailed
report dated June 2016
Energy Efficiency Services Limited (EESL) order tracker
Air conditioner ordering takes the center stage
Ordering dominated by air conditioners:
EESL placed orders worth INR7.1b in
April-May 2017, as against INR5.2b in the year-ago period, an increase of 68%
YoY. Ordering was dominated by air conditioners (63% of total orders), followed
by LED lamps (23%) and fans (10%). EESL placed orders for 0.1mn ACs (INR4.4b
in April-May v/s INR87m in the year-ago period) at average price of INR44, 200
(INR35, 000+taxes), of which Panasonic accounted for 60% and Godrej & Boyce
for 40%. For FY18, EESL targets to order 150m LED lamps, 50m tube lights and
20m fans while over FY18-20, it looks to order 20m LED tube light, 60m fans and
10m ACs.
LED sees marginal revival in pricing:
EESL placed orders for 40m LED lamps in
April-May 2017 at average price of INR41. Pricing witnessed marginal revival
(+8%) post the low bid of INR38 in February 2017. LEDVANCE accounted for 50%
of the orders, followed by Crompton (30%) and Phillips (20%). Ordering for
April-May 2017 stood at INR1.6b, as against INR2.8b during the same period last
year (down 157%). Ordering activity declined in the lighting segment, with
EESL’s focus shifting to other product categories.
Fans segment sees further price erosion:
Fans witnessed ordering of INR739m
in April-May 2017 at average price of INR740, as against earlier pricing of
INR764. EESL placed orders for 1m fans in these two months. Marc Enterprises is
the market leader with a share of 43%, followed by Crompton (23%), Surya
Roshni (20%) and Orient Electrics (12%).
Valuation and view:
We like Crompton Greaves Consumer’s strong product
portfolio, established brand, market leadership position, wide distribution
network and robust RoCE profile (30%/31% in FY18/19). We thus maintain our
Buy
rating on the stock with a target price of INR255 (35x FY19E EPS of INR6.6).
For Havells, we maintain our
Neutral
rating with a target price of INR480, given
its premium valuations.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
8 August 2016
1
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Ankur Sharma
(Ankur.VSharma@MotilalOswal.com); +91 22 3982 5449
Amit Shah
(Amit.Shah@MotilalOswal.com); +91 22 3029 5126

Capital Goods
Story in Charts
Exhibit 1: 63% of orders finalized in April/May 2017 were in
the air conditioning segment
0%
3%
10%
23%
63%
3%
Fans
Lamps
Air conditioner
Street lights
others
22%
6%
0.4%
Source: MOSL, Company
24%
18%
26%
Exhibit 2: 26% orders were in favor of lighting segment in
FY17
Fans
Streetlghts
Lamps
Aircon
Tubelights
Pumps
Others
Source: MOSL, Company
Exhibit 3: Crompton continues to maintain its market share
of 23%
Marc Ent
12%
20%
45%
Exhibit 4: FY17 witnesses strong ordering in fans, with the
segment now forming 3% of EESL ordering (+700% YoY)
Crompton Greaves
Consumer Electrical
Limited
Surya Roshni Ltd
21%
30%
Marc Enterprises
Surya Roshni
Crompton Greaves
Orient Electric
22%
23%
Orient Electric
27%
Source: MOSL, Company
Source: MOSL, Company
Exhibit 5: LED ordering falls 157% YoY in April/May 2017
due to shift in EESL’s focus toward other product categories
Philips Lighting
India Limited
Crompton Greaves
Consumer Electrical
Limited
30%
LEDVANCE
Exhibit 6: LED lamp ordering declines sharply by 34% YoY;
Phillips leading the market with 37% share
0.2%
2.1% 8.7%
5.8%
5.0%
9.7%
18.1%
16.0%
34.4%
Phillips
NTL Electronics India Ltd.
Compact Lamps
Crompton Greaves
HQ Lamps
Wipro
Surya Roshni
Evereaday
Others
20%
50%
Source: MOSL, Company
Source: MOSL, Company
5 July 2017
2

Capital Goods
Exhibit 7: Street light orders stood at INR243m, with
Qudralumen having 60% market share
Exhibit 8: Streetlight ordering saw muted growth in FY17
(+3.9% YoY), with Wipro leading the market (19% share)
Havells
Crompton Greaves
MIC ELECTRONICS
Orient Electric
Eon Electric Limited
HPL Electric & Power Ltd
BVG India Pvt Ltd
Florida Electrical
Surya Roshni
Wipro
Phillips
Source: MOSL, Company
2%
38%
62%
Quadralumen
K-LITE Industries
0%
1%
13%
19%
13%
2%
2%
4%
0%
1%
Source: MOSL, Company
Exhibit 9: EESL ordering was supported by AC segment in
April/May 2017 with orders worth INR4.4b being finalized;
Panasonic was the market leader with 60% share
Exhibit 10: AC ordering grew 576% YoY in FY17, although on
a lower base. Voltas is the market leader with 97% share
3%
40%
60%
Panasonic India
Godrej & Boyce
97%
Voltas
Others
Source: MOSL, Company
Source: MOSL, Company
5 July 2017
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Capital Goods
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