In March 2018, Havells India Limited (NSE:HAVELLS) announced its latest earnings update, which indicated that the company benefited from a strong tailwind, leading to a double-digit earnings growth of 40%. Below, I’ve laid out key growth figures on how market analysts view Havells India’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Analysts’ outlook for the upcoming year seems buoyant, with earnings growing by a robust 26%. This growth seems to continue into the following year with rates arriving at double digit 53% compared to today’s earnings, and finally hitting ₹12.1b by 2021.
While it is informative knowing the growth rate year by year relative to today’s level, it may be more valuable to analyze the rate at which the company is growing every year, on average. The advantage of this technique is that we can get a bigger picture of the direction of Havells India’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 19%. This means that, we can presume Havells India will grow its earnings by 19% every year for the next couple of years.
For Havells India, there are three relevant aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is HAVELLS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether HAVELLS is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of HAVELLS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.