CLSA puts 'Buy' on Havells; stock hits 52-week high

MUMBAI: Shares of Havells India hit 52-week high Tuesday after CLSA initiated coverage with a ‘Buy’ recommendation on the stock with price target of Rs 700 per share, an upside of over 17 per cent from its current market price of Rs 598 per share.

The FII expects the company to witness earnings growth of 27 per cent CAGR over FY12-14 on the back of earnings from domestic growth and a modest turnaround in Sylvania.

“We value Havells using an EV/Ebitda based SOTP, valuing the India business at 10.5x and Sylvania at 6.5x. This yields a price target of Rs 700 – implied FY14 PE of 14.9x, EV/Ebitda of 9.3x and PB of 4.5x. These multiples are at a modest premium to the company’s long term average (PB 4.3x, EV/Ebitda 8.9x) given the shift towards a consumer oriented business,” the report said.

Technical View

Ashwani Gujral, Fund Manager, ashwanigujral.com is bullish on the stock. He has recommended at ‘Buy’ with a price target of Rs 620 and has placed a stop-loss of Rs 562 per share.

The stock has pared some of the intraday gains after hitting one-year high of Rs 609.20 in trade today. It touched a low of Rs 584.95 in trade so far.