Havells Q4 Results

Analysts expect profits to reach FY19 levels only next fiscal

Despite rising costs, a favourable product mix of price hikes and operating leverage led to the expansion in Havells' core business margins by 119 basis points Y-o-Y to 14.6 per cent in Q4

Havells, the electrical equipment major, might be a classic case of a mid-cap stock being re-rated much ahead of an improvement in its fundamentals. While its stock continued to react positively (up two per cent on Wednesday) to a decent set of March quarter (Q4) results, the 50 per cent year-to-date gain might limit a significant upside from here, as Havells now trades at 40 times its estimated FY18 earnings. And, sustaining the profitability could be a challenge. Even if recovery after demonetisation gradually plays out, the consolidation of Lloyd's recently acquired consumer business could dilute the earnings margin. In fact, even the Q4 performance doesn't convincingly demonstrate that the note ban pressures are gone. Schemes introduced by the company during that period to push sales at dealers might be only gradually withdrawn in the coming weeks. Pricing for this, the Street did not have high expectations, too. Still, net revenue for the quarter (Q4) at Rs 1,710 crore (up 17 ..