Multibagger Havells forays into kitchen appliances segment; stock gains 2%

Havells share price: Havells shares rose in Wednesday's trading session (March 6) after the company announced a foray into the kitchen appliance segment after market hours the day before. At the day's high, the stock climbed 2 per cent to Rs 1571.7. Importantly, last week climbed its all-time high level of Rs 1591.35 on March 2, 2024.

“It is hereby informed that the company, viz., Havells India Limited, is planning to expand its existing product portfolio with the introduction of kitchen appliances such as cooktops, hobs, chimneys, and other built-in appliances, into it. The new venture is expected to bring benefits of synergies of business with its existing range of small domestic appliances,” said the company’s filing with the exchanges.

Further, the release specified that the company aims to be among the top three players within the segment in the next three years from the start of operations. The entire range of products will be outsourced to serve the domestic market. The expected date of launch of the above category of products is May 2024, according to the company’s filing.

CLSA, on the company’s foray in the space, said the competitive intensity in large kitchen appliances is rising with Havells entry. If the company achieved a market share of 10 per cent, it could lead to a Rs 45–70/share value accretion in Havells, added the brokerage.

Havells over the last five-year period has given a return of 112 per cent, doubling investors’ wealth.

Geojit, in its report dated February 5, gave a buy on the stock with a one-year target of Rs 1,496. The brokerage stated that the company’s management indicated a weakness in consumer sentiments, especially in rural areas. However, green shoots are visible, and we expect a gradual revival going ahead. 

“In the near term, Q4 is expected to be strong, led by summer-related products. We cut our revenue estimates by 2% for FY24–FY25E and expect revenue to grow by 14% CAGR, added the brokerage.

The company is trading at a relatively high valuation, with a trailing twelve-month price-to-earnings of 81.7. Furthermore, the stock is trading above its 200-day SMA, which implies that the stock is in an overall long-term uptrend.