For the first time Im trying my hands at valuing a company. Actually not valuing just writing down my thoughts on a running basis. Would love the seniors of the forum to take this forward so that I also learn on how to actually value a company. Looking forward to have an enriching experience
I think Havells is no new name to anyone, it has enough brand recognition. But still the company is in the business of electrical compnents like Switches, MCCBS, Cables, Motors, Fans, etc… For one thing the brand recognition of the company and their designing is top-class in the whole segment and also product quality is v.good. Just talking from the personal experience of using Havells products.
The company is one from QRG Group. Need to dwelve in deeper to know about this.
The revenue growth of company is impressive. The company in 2008 had acquired Sylvania in UK. That gave a immediate boost to company’s revenues to the tune of 3000cr. The acquisition was majorly funded by debt, The company has steadily been reducing its debt from 1230cr in 2008 to 730cr in 2012. That I see as a good move.
The ROE of the company is pretty impressive at above 45% which is really healthy. The Debt/Equity ratio is at 1. Quite high by industry standards but still not bad.
The UK based Sylvania was till 2010 in loss from 2011 has started giving profits and in 2012 was almost in line with the profit in their Indian Arm, this tells a lot about the capability of the management. The Revenue growth in Sylvania is quite ok.
When you go through the AR you almost get an idea of how clean and transparent the management is. You can actually visualise whats happening in the plant and there is surely an thrust in cost cutting and improving efficiency.
Seeing that lightning fixtures & consumer durables account for only 31% of net revenues, promoting this as a consumer brand is not so profiting. The reason being Switchgears, Cables business is largely controlled by dealers & as people are moving more towards preferring buying readymade apartments rather than building a home themselves, brand value takes a back seat & price becomes the most important element, so company wont enjoy much of pricing power. Company is pushing to increase sales in consumer durables because the lightning segment alone gave 25%margin. So company is moving in the right direction.
The company has presence in Europe, Latin America, South East Asia, China & South Africa. That is pretty diversified. At P/E of 19, it doesnt provide any sufficient cushion I guess.
There is also no mention of any new plants and further growth starategies other than marketing but seems to be good R&D work happening. They have published 5 patents in 2012. in 2011 they had filed for 12 patents. R&D expense @ 0.3% of the total revenue.