Havells India Ltd – Making a Difference-Making in India

Date Published: February 15, 2021

Company Overview:

Havells India Ltd is a leading fast moving electrical goods company with presence across India. Its product range includes Industrial & Domestic Circuit Protection Switchgear Cables& Wires Motors Fans Power Capacitors Luminaires for Domestic Commercial & Industrial applications Modular Switches Water Heaters and Domestic Appliances covering the entire gamut of household commercial and industrial electrical needs. Havells owns prestigious brands like Havells Crabtree and Standard. The company has 12 state-of-the-art manufacturing units in India located at HaridwarBaddi Noida Sahibabad Faridabad Alwar and Neemrana. The company has 43 branch offices. Havells India Ltd was incorporated as Havell’s Pvt Ltd in August 1983 and converted into a public limited company in March 1992. The company started their operations by producing miniature circuit-breakers and distribution boards in the year 1984. Havells India (HAVL) has consistently identified and entered new product categories over the years. 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 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.

Industry Overview:

The Indian electronic systems design and manufacturing (ESDM) industry is on its way to achieving its full potential in terms of both production and design capabilities This indicates that the ‘Make in India’ initiative is beginning to have a positive impact on domestic manufacturing. Favourable business policies for the domestic electronics sector have undoubtedly played their part, particularly in facilitating the setting up of manufacturing facilities for smartphones, set-top boxes, televisions and other appliances. This presents an opportunity to the electronic components manufacturing industry of the country. Over the next five years, accelerated local manufacturing of electronic products to cater to growing domestic demand will drive the market for electronic components in India. The electronic components segment is likely to see bright days in the near future and exports of components are expected to grow as the government has increased the MEIS (Merchandise Exports from India Scheme) benefits for this industry. Also, the recent rise in the custom duties on LED lights, STBs, energy meters, flat panel TVs, mobile phones, microwave ovens, etc, will push up the demand for the components used in these products. With manufacturing costs in China rising and the industry growing in India, exports are bound to grow. The focus of programmes such as Make in India and Digital India is also shifting towards the ESDM sector.

Company Operations:

Havells India Limited is a leading Fast Moving Electrical Goods (FMEG) Company and a major power distribution equipment manufacturer with a strong global presence. Havells enjoys enviable market dominance across a wide spectrum of products, including Industrial & Domestic Circuit Protection Devices, Cables & Wires, Motors, Fans, Modular Switches, Home Appliances, Air Conditioners, Electric Water Heaters, Power Capacitors, Luminiares for Domestic, Commercial and Industrial Applications. Today, Havells owns some of the most prestigious brands like Havells, Lloyd, Crabtree and Standard. Its network constitutes of 4000 professionals, over 7900 plus dealers and 40 branches in the country. Company products are available in 40 countries. The company has 14 state-of-the-art manufacturing plants in India located at Haridwar, Baddi, Sahibabad, Faridabad, Alwar, Neemrana, Guwahati and Ghiloth manufacturing globally acclaimed products, with excellence and precision in the electrical industry. Havellsalongwith its brands, have earned the distinction of being the preferred choice of electrical products for discerning individuals and industrial consumers both in India and abroad. Havells offers same quality products for both Indian and International markets. It is committed to keep powering the world with its state-of-the-art innovations and energy-efficient solutions. Currently over 90% of its product offerings are energy efficient and manufactured in-house.

Products :

Building Circuit Protection, Miniature Circuit Breaker, Industrial Circuit Protection, Motors, Professional and Consumer Lighting, LED Lights and Bulbs, Small Domestic Appliances, Air Purifiers, Air Coolers, Capacitors, Ceiling Fans, Table Fans, Pedestal Fans, Wall Fans, Exhaust Fans, Water Heaters, Water Purifiers, Domestic Water Pumps, Electrical Wire Accessories, Personal Grooming Equipment’s.

Unmatched Distribution Strengths:

The company pioneered the concept of exclusive brand showroom in the electrical industry with ‘Havells Galaxy’. Today over 415 Havells Galaxies across the country are helping customers, both domestic and commercial, to choose from a wide variety of products for different applications. Havells became the first FMEG Company to offer door step service via its initiative ‘Havells Connect’. Thanks to the quality of products and quicker service, it has minimum customer complaints and highest customer satisfaction.

Market scenario: According to Global Industry Analyst Inc., the global market for electronic components is expected to reach US$ 191.8 billion by 2022, by when Asia Pacific will have the dominant share of the pie. Following this global trend, the Indian electronic components market is also poised to grow significantly. This growth will be driven by rising local demand and growing disposable incomes. Moreover, adoption of high-end technology devices, technology driven transformations such as the roll out of 4G/LTE networks and the Internet of Things (IoT), policy and incentive boosts from the government, initiatives like ‘Digital India’, ‘Smart Cities’, wider broadband connectivity and e-governance programmes are all driving the accelerated use of electronic products. The growth of the electronic products industry has started driving the expansion of the electronic components industry as well.
Industry experts predict that over the next ten years, India’s own electronic components production ecosystem will be in a position to compete globally. The Indian automotive sector, particularly automotive electronics, will witness a tremendous boost, propelled by free trade agreements and venture capital funds. However, this will only be possible if the Indian electronic components industry can transform itself into the best-in-class manufacturing hub. 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 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.  

Our View:

Havells India Limited is a leading Fast Moving Electrical Goods (FMEG) Company and a major power distribution equipment manufacturer with a strong global presence with an Annual Turnover of 1.5 Billion US Dollar and market cap of more than 4.5 Billion US Dollar with a strength of over 6500 seasoned professionals.Havells enjoys enviable market dominance across a wide spectrum of products, including Industrial & Domestic Circuit Protection Devices, Cables & Wires, Motors, Fans, Modular Switches, Home Appliances, Air Conditioners, Electric Water Heaters, Power Capacitors, and Luminaires for Domestic, Commercial and Industrial Applications. With philosophy of Make in India, extensive distribution network and world class quality. A PAN India and Global presence in more than 50 Countries and 14 State-of-the-art highly automated manufacturing plants in INDIA, accredited with ISO-9001, 14001, 45001 & 50001 certifications and International Product certifications include Kema, IEC, CB, ESMA, GSO, Soncap, CSA, SIRIM etc for selected categories/ products, having a diverse portfolio in electrical products with 16 business verticals offered under one umbrella “HAVELLS” brand.Some of Testing Labs in India are accredited for In-house testing/verifications by Intertek & NABL and Own R&D Centers in India (Noida & Bengaluru) housing more than 500 Engineers. Havells owns some of the most prestigious brands like Havells, Crabtree, Standard, Lloyd& REO.

As per the mean estimates of earnings projections made by brokers at Bloomberg, the estimated EPS for FY2021 and FY2022 stands at Rs.9.21 and Rs.13.41 respectively as compared to EPS of Rs11.83 for FY 2020. The stock is trading at a PE of 40.85. Therefore, taking into consideration that this recommendation of Havells India Ltd is being given for  1 year time horizon.

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