Havells India (HAVELLS)

FairStock Score: 48/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• 5-year revenue CAGR of 15.80% shows durable long-term growth in consumer electronics.
• Very low leverage with Debt/Equity of 0.03 and strong free cash flow of ₹1,210 Cr.
• High returns: ROCE of 25.32% and ROE of 17.84% indicate a strong competitive position.
• Clean fundamentals: Piotroski F-Score of 8/9 and Altman Z-Score of 6.55 reflect financial stability.
• Promoter holding of 59.38% aligns ownership with minority shareholders.

Concerns

• Extremely rich valuation: P/E of 57.71, P/B of 9.50, and PEG of 8.31 leave no margin of safety.
• Price of ₹1,260.30 is far above Graham Number of ₹266.07 and DCF value of ₹727.11.
• Recent momentum is slowing: sales growth of 8.17% and profit growth of 6.01% lag the 5-year revenue CAGR.
• Dividend yield of only 0.72% means investors are dependent on capital appreciation alone.

AI Analysis

At heart I am a buyer of wonderful businesses, but only at a price that leaves something for me. Havells India looks like a wonderful business. It has grown revenues at 15.80% annually over five years, yet uses almost no leverage — debt-to-equity is just 0.03. The return on equity is 17.84% and return on capital employed is 25.32%. Those are the kind of numbers that tell me the company possesses pricing power and a distribution network that competitors cannot easily copy. Free cash flow of ₹1,210 crore, a Piotroski score of 8/9 and an Altman Z-score of 6.55 all point to financial strength. Promoters own 59.38%, so their money is where their mouth is. But the price is the problem. At ₹1,260.30, the market cap is ₹87,634 crore, and the company trades at 57.71 times earnings and 9.50 times book value. Graham would say the intrinsic value is around ₹266.07; the DCF estimate here is ₹727.11. I am being offered a margin of safety that is deeply negative. I would be paying not just for today's business, but for perfection for years ahead. Recent growth has slowed — sales grew only 8.17% and profits only 6.01%, far below the five-year revenue run rate. The dividend yield of 0.72% is negligible. The PEG ratio of 8.31 tells me the valuation is decades ahead of the growth. This is the classic great company, but not a great investment at this price. I would keep it on my watchlist, monitor whether earnings catch up to the valuation, and wait for a margin of safety. Patience is the investor's greatest ally.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer