HAVELLS SHARE: BUSINESS CASE STUDY

BUSINESS ANALYSIS 

Havells share deals in FMEG (Fast Moving Electrical Goods) business and has a strong global presence in the market which is due to its Make in India initiative, world class quality and extensive distribution network. 

Havells share has emerged as a major power distribution equipment manufacturer. 

Company has wide spectrum of products which are as follows: 

1. Industrial & Domestic Circuit Protection Devices. 

2. Cables & Wires. 

3. Motors. 

4. Fans. 

5. Modular switches. 

6. Home Appliances. 

7. Air conditioners. 

8. Electric water heaters. 

9. Power capacitors. 

10. Luminaries for Domestic, Commercial and Industrial Applications. 

Havells started exclusive brand showrooms related to electrical industry with a brand name of “Havells Galaxy”. 

The company expanded Havells Galaxy to more than 500 locations with an intention of helping their customers to choose a wide variety of products present in their portfolio. 

Havells share is the 1^st company in FMEG segment which offers door step service through its initiative of “Havells Connect”. 

Havells share has minimum customer complaints due to the quality of products and faster service. 

The brands under this company are as follows: 

1. Lloyd. 

2. Crabtree. 

3. Standard. 

The company consists of 4000 professionals, 14000+ dealers and 39 branches in PAN India. 

Havells share has 13 states of the art manufacturing facilities in India. 

The company is not only performing better in innovating and producing the products, it has also been a part of CSR activities wherein they are sponsoring mid-day meals in government schools of Almar district. 

BUSINESS MODEL OF CONSUMER APPLICATIONS 

BUSINESS MODEL OF INDUSTRIAL APPLICATIONS 

REVENUE MODEL OF HAVELLS SHARE 

The revenue contribution of each business is as follows: 

Cables Division- 32 % 

Electrical Consumer Division- 23 % 

Llyod Business- 17 % 

Switchgears- 16 % 

Lightning & Fixtures- 12 % 

UNIQUE SELLING PROPOSITIONS IN EVERY SEGMENT 

Market share:  

MCBs – 18% 
Switches – 13% 
Flexible Cables – 16% 
Power Cables – 11% 
Lightning & Fixtures – 14% 
Fans – 19% 
Water Heaters – 19% 
Other Appliances – 6% 

1st- MCB & Water Heaters.  

2nd- Fans.  

3rd- Switches, Flexible power cables & other appliances 

Manufacturing Capability:  

13 Manufacturing plants with 90% products built in house. 

Leading FMEG company: 

Due to its Innovative products and on time delivery service. 

Brands: 

Owns Lloyd, Crabtree, Standard, Havells & REO functioning in different product segments. 

Distribution Network: 

11,000 direct dealers, 160,000 retailers & 250,000 electricians. 

Diversified Product Portfolio. 

PRESENCE OF HAVELLS SHARE IN INDIA 

TOP MANAGEMENT 

The management team of Havells share is as follows: 

Management Team	Designation	Experience with Havells share	Total Experience
Anil Rai Gupta	Chairman and Managing Director	30+ years	–
Surjit Kumar Gupta	Non-Executive and Non-Independent Director	39+ years	49+ years
Ameet Kumar Gupta	Whole time director	8+ years	33+ years
Rajesh Kumar Gupta	Whole time director (Finance) & Group CFO	30+ years	–
Siddhartha Pandit	Whole time director	3+ years	13+ years
T.V. Mohandas Pai	Non-Executive and Non-Independent Director	8+ years	22+ years
Puneet Bhatia	Non-Executive and Non-Independent Director	8+ years	32+ years

In the management of Havells share, there is a mix of young and senior officials. This brings an Innovative and energetic atmosphere in the company. 

A positive sign for the company from growth perspective. 

INTERESTING FACTS ABOUT THE TOP MANAGEMENT 

Mr. Anil Rai Gupta has been a constant support to his father from the start and supported him in all endeavors till 2014 when all the responsibilities were passed onto him. 

Mr. Surjot Kumar Gupta has been an eminent part of the company since its initiation and is a reputed member of the promoter group. 

Mr. T.V. Mohandas Pai was a member of the Board at Infosys Ltd. 

Mr. Puneet Bhatia is a successful Managing Director and also is the country head of India for TPG Asia. 

INDEPENDENT DIRECTORS 

Independent directors are very critical elements of the management as they tend to provide unbiased opinions and suggestions which is completely focused on the growth of the company. 

Name of Director	Designation
Mr. Jalaj Ashwin Dani	Independent Director
Mr. Upendra Kumar Sinha	Independent Director
Mr. Subhash S Mundra	Independent Director
Mr. B Prasada Rao	Independent Director
Mr. Vivek Mehra	Independent Director
Namrata Kaul	Independent Director
Mr. Ashish Bharat Ram	Independent Director

Mr. Jalaj Ashwin Dani is a co-promoter of Asian Paints and has spent over 2 decades in various segments of the company. 

Mr. Upendra Kumar Sinha was the former chairman of Securities and Exchange Board of India. 

Mr. Subhash S Mundra retired as Deputy Governor of RBI in the year 2017. 

Mr. B Prasada Rao was the chairman and managing director of Bharat Heavy Electricals till 2015. 

Mr. Vivek Mehra has a professional career of over 40 years in Chartered Accountant field. 

Ms. Anjali Seth has an experience of 30+ years in the field of law. 

Smt. Namrata Kaul has an experience of over 30 years in banking sector. 

Mr. Ashish Bharat Ram became the Managing director of SRF Ltd in 2007. 

SALARY TAKEN BY THE MANAGEMENT IN FY 2020-21 

The below mentioned data is taken from the annual report published by Havells share. 

(Amount in ₹) 

Name of Director	Category	Salary
Mr. Anil Rai Gupta	Chairman and Managing Director	24.55 Cr
Mr. Ameet Kumar Gupta	Whole time director	9.79 Cr
Mr. Rajesh Kumar Gupta	Whole time director (Finance) & Group CFO	12.94 Cr
Mr. Siddhartha Pandit	Whole time director	96 Lakhs

Note: The salaries of the management should be 10% of net profit for Executive directors while 5% for any one managing or whole-time director which is abided by the company. 

FINANCIAL KEY METRICS 

FINANCIAL KEY METRICS	VALUE
MARKET CAPITALIZATION	₹ 75,754 Cr
STOCK P/E	66.0
INDUSTRY P/E	30.8
ROE	21.2%
ROCE	29.2%
DEBT TO EQUITY RATIO	0.08

The market capitalization of Havells share is ₹ 75,754 Cr which is a large cap company with a strong hold in its sector. 

In Electrical Equipment sector, Havells share stands 2^nd among other competitors. 

Stock P/E is the ratio of Price per share to Earning of the share. Currently the stock P/E is 66.0 which is higher than the industry P/E of 30.8. In recent times, the market is willing to pay higher for Havells share based on its past or future earnings. 

The return on equity is 21.2% which gives an indication that the investors are getting 21.2% of return for the amount they have invested in Havells share. 

The return on capital employed is 29.2% and shows a superb operating income is generated for every rupee of capital invested. 

Debt to equity ratio tells the company’s liabilities with respect to the shareholder’s equity. Havells share currently has 0.08 which is negligible and the company is focusing on reducing it further. 

SHARE HOLDING PATTERN 

Share Holding Pattern	Dec-19	Mar-20	Jun-20	Sep-20	Dec-20	Mar-21	Jun-21	Sep-21	Dec-21
Promoters	59.52	59.52	59.5	59.5	59.5	59.5	59.47	59.47	59.47
FIIs	25.88	23.04	21.95	22.22	24.36	24.91	24.01	26.76	26.51
DIIs	5.89	8.27	9.64	9.86	8.36	7.89	8.17	6.12	6.26
Government	0.18	0.23	0.23	0.23	0.23	0.19	0.12	0.11	0.1
Public	8.53	8.94	8.68	8.18	7.55	7.51	8.17	7.54	7.66
Others	0.01	0.01	0.01	0.01	0.01	0.01	0.05	0.01	0.01

The promoters are maintaining a healthy stake in Havells share which is optimistic sign for the company. 

Retail investors are gradually increasing their interest in this share. 

FUTURE OUTLOOK FOR HAVELLS SHARE 

(A) Investment in Infrastructure:  

Infrastructural development such as roads, ports, housing, railways is a primary focus of the government of India. This will lead to a rise in demand of electrical equipment such as Cables, Lighting and Switchgears. 

(B) Favourable demographics:  

Havells share sees a growth in electrical and electronic goods due to demand in demographic indicators which are as follows: 

1. Urbanisation. 

2. Aspirational young population. 

3. Consumer’s request for quality and branded products. 

4. Increase in income of individuals, etc. 

(C) Electricity penetration:  

There has been a rise in electricity access to the individuals of India which is seen not only in urban areas but also in rural part of the country. Government of India has generated schemes which has the intent of providing electricity for all and reducing the loss of electricity in transmission. 

(D) Exports:  

Indian companies are considered by the world market as an alternative for other Asian countries. Havells share has a strong manufacturing base and hence sees an opportunity to grab the market of African and South East Asian countries. 

(E) Product basket:  

Havells has a strong portfolio of products which is a great opportunity for the company to capture more market in different industries.