Havells, V-Guard, Voltas rally up to 5% on healthy outlook

Shares of Havells India hit a new high of Rs 1,590.90, surging 5 per cent on the BSE. A sharp run-up in the stock price has seen the m-cap of Havells India inch towards Rs 1 trillion

Shares of household appliances companies Havells India, V-Guard Industries, and Voltas rallied up to 5 per cent on the BSE in Saturday's special session on anticipation of better January-March quarter (Q4) on summer demand for fans and air-conditioners (ACs), along with rising infrastructure spends which may drive sales of cables and switchgears.

Shares of Havells India hit a new high of Rs 1,590.90, surging 5 per cent on the BSE in the intraday trade. Since February, the stock has zoomed 23 per cent. A sharp run-up in the stock price has seen the market captialiation of Havells India inch towards Rs 1 trillion. The company's market capitalisation hit Rs 99,699 crore in the intra-day trade today.

Havells India Ltd is a leading FMEG (Fast moving electrical goods) and a consumer durable company, with a presence across 60 countries. Its product range includes Industrial & Domestic electrical goods and consumer durables. Havells owns prestigious brands like Havells, Lloyd, Crabtree, Standard and Reo.

The company has indicated a positive demand outlook for the upcoming summer season and expects to earn better margins in Q4FY24 compared to those seen in Q3, as it expects a pickup in demand for fans and air conditioners. Cables, wires, and switches are also expected to do well on the back of rising infrastructure spending.

Through its multi-product portfolio serving a diverse consumer base, HDFC Securities believes Havells is well placed to benefit from the current uptick seen in private/government capex and real-estate tailwind, given it has a diverse product portfolio covering 70 per cent plus of household electric sockets; the company being among the top 3 players in most product categories; Lloyd's portfolio gaining traction; and on the back of innovation focus and its go-to-market strategy (GTM) expansion to become more omnipresent.

Separately, shares of V-Guard Industries, too, hit a new high of Rs 344.75, up 2 per cent on the BSE. In the past one week, the stock has rallied 11 per cent as compared to the 1.5 per cent rise in the S&P BSE Sensex.

Brokerage firm ICICI Securities has maintained a 'buy' rating on the stock with a target price of Rs 382 per share.

With visible signs of demand revival (since December) and expectations of a good summer season, the management is optimistic about stronger topline growth in Q4. 

Given its newly constituted team (including a south-focused sales team) and preparations for scaling up its e-commerce/MT presence, Sunflame's growth rate could accelerate in the upcoming quarters. HDFC Securities is baking in 210bps margin improvement for FY23-26 due to a softening RM basket, stabilising manufacturing operations, and operational leverage.

That apart, shares of Voltas, the global air conditioning and engineering services provider of the Tata Group, hit a fresh 52-week high of Rs 1,139, rising 5 per cent in the intraday trade.

"Voltas has a positive outlook on India business given rising infrastructure spending. In Qatar, challenges are likely to persist medium term due to delays in receivables due and timeline extensions, leading to cost overruns. The company has booked a Rs 300 crore-400 crore provisional loss on international operations in FY24 YTD," BOB Capital Markets said.