Dividend paying stock turns ₹1 lakh to ₹12 Cr after 1 bonus share. Buy?


With a market capitalization of Rs. 72,208.38 Cr., Havells India Limited is a large-cap business that operates 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. While declaring its Q3FY23 results the company announced 300% dividend for which 28.01.2023 has been set as the record date and due to the T+2 settlement mechanism of the company the stock shall turn ex-dividend on 25-01-2023.

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 Equity Share of Re. 1/- each i.e. @ 300% on the Equity Share Capital of the Company. The same shall be payable to all those Shareholders whose names appear in the Register of Members as on the Record Date i.e. 28.01.2023 (a separate intimation of the same has already been given to the Exchanges vide letter dated 06.01.2023). The Dividend shall be paid/ dispatched to the shareholders on or before 30 days from the date of its declaration i.e. on or before 17th February, 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 recorded a consolidated net profit of 283.52 Cr in the quarter ended December 2022 as against 305.82 Cr recorded in the quarter ended December 2021, representing a YoY fall of 7.30%. The company posted an EPS of 4.53 per share in Q3FY23 as against 4.88 posted in the year-ago quarter.

Havells India share price and bonus share history

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

Havells India share price target

Post Q3 earnings of Havells India, the research analysts of Yes Securities said “Havells has once again delivered inline revenue growth with sequential margin improvement. Growth was aided by higher volumes across the product categories with B2B side faring better while B2C business saw impact of high inflationary environment. Margins saw sequential improvement on back of stable commodity prices as most of the high‐cost inventory for Havells was liquidated in Q3. Management expects further margin improvement in Q4 as high‐cost inventory for Lloyds would be liquidated in Q4. Managementis cautiously optimistic of demand as channelfilling for summer products has been strong for Fans and RAC, while rise in commodity prices from end of December could lead to margin volatility going forward.” “Given the thrust on revenue growth and market share gains, we are factoring FY22‐25E revenue growth trajectory of 15% CAGR. We however have trimmed our margin estimates considering volatility again increasing in commodity prices, higher investments in brand building and normalization on A&P spends. We estimate EBITDA and PAT CAGR of 13% and 16% respectively. We maintain our target price to 1,480 valuing the stock at 55x and roll forward our target multiple and reiterate our BUY rating. We see strong revenue growth momentum and gradual margin improvement in next 2 years as company is increasing its distribution presence on e‐commerce and rural areas. We continue to maintain our positive stance on the stock and current correction in the stock price should be used to accumulate the stock as we feel company can continue to outperform industry and its peers,” they further added.

Prabhudas Lilladher said in a note that “We tweak our FY23/FY24 earnings upwards and maintain ‘BUY’ rating on Havells India (HAVL IN). Improvement in ECD mostly with fan destocking and expected price hike, robust performance in cable business and expected sequential reduction of losses in Lloyd with reduction in high cost inventory & price hike, will augur well for Havells in coming quarters. We are optimistic on long term growth prospects considering 1) its diverse product portfolio covering 70% of household electric sockets, 2) is amongst top 3 players in most product categories 3) focus is on innovation and continuously driving brand affinity and 4) expanding distribution reach with emphasis on untapped rural market (through rural vistaar project covered 40,000 outlets in FY22 and planned opening of >1000 Utsav stores by FY23). We estimate 16.9% earnings CAGR over FY22-25 and assign a DCF based target price of Rs1,447. Maintain ‘BUY’.”

Nirmal Bang Securities said “Havells India reported 3QFY23 revenue of Rs41.2bn, up 12.8% YoY (3-year CAGR of 22%), 2.1%/1.8% above our/consensus estimates on the back of healthy growth across all business verticals. Switchgears/Cables/Lighting & Fixtures/ECD/Lloyd grew by 3.7%/17.1%/3%/4.7%/30.3% YoY. Gross margin expanded by 70bps YoY to 33% due to the easing of commodity cost pressures. EBITDA declined by 3.8% YoY to Rs4.2bn. EBITDA margin contracted by 180bps YoY to 10.3%, which was above our estimate of 8.5%, but below consensus estimate of 10.6%. EBITDA margin improved by 250bps QoQ mainly due to recovery in Cables segment margin post liquidation of high-cost inventory. Contribution margins expanded across segments due to stability in raw material (RM) prices during the first half of 3QFY23. Consequently, the PAT declined by 7.2% YoY to Rs2.8bn. The bottom-line was above our estimate by 25%, but below consensus estimate by 1.8%. The management highlighted that muted B2C demand affected consumer facing businesses. Further, RM cost volatility started increasing from the second half of 3QFY23. Margins in Lloyds are expected to improve 4QFY23 onwards as it exhausts highcost inventory. We believe that while there may be near term pain on the margins front, outlook over the medium term remains strong as efforts towards brand building in Lloyds will likely bear fruits. We have tweaked our numbers marginally and continue to maintain a BUY on Havells with a revised target price (TP) of Rs1,415 (Rs1,475 earlier) based on 50x on Sept’24E EPS.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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