Based on Havells India Limited’s (NSE:HAVELLS) earnings update in March 2018, it seems that analyst forecasts are fairly optimistic, with profits predicted to increase by 27% next year relative to the past 5-year average growth rate of 8.9%. With trailing-twelve-month net income at current levels of ₹6.7b, we should see this rise to ₹8.6b in 2019. Below is a brief commentary around Havells India’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect Havells India to keep growing?
The view from 26 analysts over the next three years is one of positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2021, HAVELLS’s earnings should reach ₹12.1b, from current levels of ₹6.7b, resulting in an annual growth rate of 19%. This leads to an EPS of ₹19.5 in the final year of projections relative to the current EPS of ₹10.8. The main reason for growth is a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. Margins is currently sitting at 8.3%, which is expected to expand to 9.3% by 2021.
Future outlook is only one aspect when you’re building an investment case for a stock. For Havells India, there are three fundamental factors 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 India 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 India is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Havells India? 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.