Havells' underperformance may take a while to reverse; stock falls

Valuation of 34x FY21 earnings does not capture whole picture

When stocks in the cooling solutions segment such as Voltas, Blue Star, and Whirlpool delivered handsome gains, diversified consumer durables player Havells failed to live up to expectations. With the stock down 6.5 per cent in 2019, the question is how soon it can reverse the past year’s underperformance.  Going by the current trend, it appears that it is some time away. 

For one, Havells’ dependence on traditional segments such as switchgears, lighting, and cables remains high at 65 per cent of its total revenues. With the economic downturn showing little signs of reversal, revenue streams from these pockets could stay