Havells India slips 10% on heavy volumes after rallying 32% in a month

Shares of Havells India dipped 10 per cent to Rs 1,063 on the National Stock Exchange (NSE) on Friday after more than one per cent equity of the company changed hands through multiple block deals.

Till 01:42 pm, a combined 8.64 million equity shares, representing 1.4 per cent of total equity of Havells India, had changed hands on the NSE and BSE. The name of the buyers and sellers were not ascertained immediately. There were pending sell orders for around 91,000 equity shares on both the exchanges, data shows.

The stock hit a record high of Rs 1,195 on Thursday, January 28. In the past one month, it has rallied 32 per cent, as compared to 1 per cent decline in the Nifty50 index, till yesterday.

The company, on Thursday, announced that it has taken land measuring 45.58 acres on long term lease for 99 years, at Sri city, Andhra Pradesh at tentative investment of Rs 39 crore. The company said the land may be used for future capacity expansion.

At present company has total 14 manufacturing units, located in northern and eastern regions of India. Havells India is planning to expand its manufacturing base in the Southern regions. We believe, near plant in Sri City may bring advantage to Havells due to its close proximity of port and optimisation of freight cost by quickly catering to southern and western markets versus current practice of serving from its plant located in North India, ICICI Securities said in a note.

For October-December quarter (Q3FY21), Havells India had reported a strong set of numbers with standalone net profit jumping 75 per cent year on year (YoY) to Rs 349 crore, on the back of strong revenue growth. In comparison, the S&P BSE Sensex was down 1 per cent during the same period. Ebitda (earnings before interest, taxes, depreciation, and amortization) margins expanded by 420 basis points (bps) at 16 per cent from 11.8 per cent in the corresponding quarter of previous fiscal. The company’s revenue during the quarter increased by 40 per cent YoY at Rs 3,166 crore.

While the management cautioned toward extrapolating Lloyd’s performance from a lean season, it believes that structurally Lloyd is emerging as a key growth driver for the company, and in-house manufacturing has given strong impetus to growth. The Production Linked Incentive (PLI) Scheme in the AC industry (details not out yet) should augur well for the company. Havells is also open to the concept of contract manufacturing to capture the export market – which could prove a game-changer, analysts at Motilal Oswal Securities said in result update with ‘neutral’ rating on the stock.

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