Stock in Action - HAVELLS

HAVELLS Stock Movement of Day 

Probable Rationale Behind Havells Stock Surge

Havells India Ltd. has experienced significant surge in its stock price, driven by many factors:

1. Strong Financial Performance
Havells Ltd reported robust consolidated sales of ₹ 4,469.75 cr for quarter ended Dec 31, 2023, marking 13.08% increase from previous quarter & 7.26% increase from year-ago quarter. Its profit for latest quarter stood at ₹ 287.91 cr, reflecting 1.55% growth from same quarter year ago. This strong financial performance has boosted investor confidence in Havells.

2. Market Cap Milestone
Havells India recently joined elite group of companies with market capitalization of ₹ 1 tn. This milestone was achieved after company's shares surged to record high of ₹ 1,627, representing 4% increase on BSE. Stock's outperformance in market reflects not only positive investor sentiment but also confidence in company's growth prospects.

3. Anticipation of Q4 Demand
Havells India's stock has been outperforming market in anticipation of better demand for fans & air-conditioners (ACs) in Jan-Mar quarter (Q4). As leading player in not only fast-moving electrical goods (FMEG) but also consumer durables segment, Havells is well-positioned to benefit from increased demand for its products, especially during peak summer season.

4. Product Innovation & Expansion 
Havells Ltd strategic initiatives, such as launching industry-first designer air conditioner ranges & refrigerators equipped with advanced technology, demonstrate its commitment to innovation & meeting evolving consumer needs. Havells' focus on not only enhancing product offerings but also expanding its market presence across 60 countries has contributed to its stock's upward trajectory.

5. Technical Analysis 
Technical indicators suggest bullish outlook for Havells stock. Company has broken out of prolonged consolidation period & symmetrical triangle pattern, indicating potential upside towards ₹ 1,820 & ₹ 1,880 levels. Not only MACD but also RSI indicators support current bullish momentum, further affirming positive sentiment among investors.

Havells Ltd. Conference call Highlights - Jan 2024

Capex
• Formation of subsidiary in US for HVAC distribution
• Expansion of capacity in not only cables but also wires segment to cater to demand

New products
• Not only continued brand but also talent investments for sustained growth
• E-commerce channel contributing around 5% to revenue mix

Guidance
• Expect normalcy in demand market post BEE transition
• Expectation of improved B2C demand in upcoming quarters

Margins
• Margins impacted due to fire in lighting manufacturing unit
• Margins improved significantly due to not only innovation but also consumer focus
• Efforts to not only optimize capacity utilization but also improve efficiency in Lloyd
• Not only cost-saving initiatives but also efficiency improvements to drive margin growth

Market trends
• Strong volume growth in lighting, impacted by price deflation
• Small domestic appliances category benefitted from festive demand
• Muted growth in ECD segment due to higher base in fans

Brand focus
• Participation in marquee projects through professional lighting
• Focus on sustained growth through not only innovation but also brand investments

Segment performance
• Improved segmental contribution margins despite impact on segment results
• Higher ad spends impacting EBITD margins in quarter
• Impact of product mix on declining margins in not only wires but also cables

Future outlook
• Journey towards improving margins in Lloyd segment over long term
• Optimizing current capacity before adding new capacity in RAC segment
• Confidence in maintaining/improving margins despite industry structure

Conclusion

Havells Indi Ltd.'s surge in stock price can be attributed to its strong financial performance, market cap milestone, anticipation of increased demand, product innovation, but also favourable technical outlook. These factors collectively contribute to positive investor sentiment & bullish momentum surrounding company's stock.