The Hindu Business Line : Havells in focus on large order talk

In September 2003, Havells had acquired T-Series fan manufacturing unit at a cost of Rs 10 crore. The unit has an annual production capacity of 1.2 million units.

The company, which commenced commercial production in December-January, is selling fans under the `Havells' brand.

While at this juncture there is no means of confirming the market talk, analysts maintain given the products' success in the market, an order win from Wal-Mart is a distinct possibility.

Additionally, buoyed by the success of its division, the company is said to be ramping up production.

According to a Stratcap Securities report, the company has already captured 10 per cent of the organised market share in the fans section and registered a turnover of Rs 15.08 crore for the second half of financial year 2004.

The company is said to be targeting a turnover of Rs 40 crore from this segment for the current fiscal.

Havells is one of the country's largest electrical equipment manufacturing companies, manufacturing building circuit protection equipment, industrial and domestic switchgears, cables and wires, energy meters, fans and lighting equipment.

The company's foray into the consumer electrical equipment business is an initiative meant to widen its product profile.

"Given its high ROE (return on equity) — 38.3 per cent — high growth rates, improving margins and a declining risk profile, the stock should command an higher valuation," adds the report.

According to Mr Sameer Ranade of Pioneer Intermediaries, the ramp up in the electrical consumer division (ECD) division should enable Havells to significantly grow its revenues and profits.

The growth in construction, housing activity is expected to boost realisations in its electrical cables and switchgears segment.

"We expect Havells revenues to grow 43 per cent to Rs 520 crore in FY05. Realisations are buoyant in all its main products and accordingly we expect OPM (operating profit margins) to improve to 11.6 per cent in FY05," he adds.

Brokers maintain that that given its sound fundamentals, the counter is likely to retain investor interest.

The bearish trend on Thursday was attributed to promoter selling.

The stock ended the day at Rs 141.40 down 3.18 per cent with around 1.8 lakh shares traded on the BSE.

On the NSE, Havells closed at Rs 141.95, down 2.91 per cent, with 2.82 lakh shares traded. About 29 per cent of the traded shares was presented for delivery.

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