Havells India downgraded to 'Hold' by MarketsMOJO due to high valuation and slow growth

Havells India, a leading player in the cable industry, has recently been downgraded to a 'Hold' by MarketsMOJO. This decision was based on various factors, including the company's high management efficiency with a ROE of 18.41% and a low Debt to Equity ratio of 0 times.
In addition, the company has shown positive results in the Jun 24 quarter, with its OPERATING CF(Y) at its highest at Rs 1,952.89 Cr, DPR(Y) at 44.39%, and CASH AND CASH EQUIVALENTS(HY) at its highest at Rs 3,038.17 cr.

Technically, the stock is currently in a Mildly Bullish range, with multiple factors such as MACD, Bollinger Band, and KST indicating a bullish trend.

Furthermore, the company has a high institutional holding of 34.72%, which suggests that these investors have better capability and resources to analyze the fundamentals of the company compared to retail investors. Their stake has also increased by 0.65% over the previous quarter.

With a market cap of Rs 1,18,300 cr, Havells India is the largest company in the cable industry, constituting 35.88% of the entire sector. Its annual sales of Rs 19,562.42 are also 26.57% of the industry.

However, the company has shown poor long-term growth, with its operating profit growing at an annual rate of only 6.01% over the last 5 years. Additionally, with a ROE of 17.1, the stock is currently trading at a very expensive valuation with a 16.1 Price to Book Value. This is also reflected in its premium trading compared to its average historical valuations.

While the stock has generated a return of 45.75% over the past year, its profits have only risen by 24.7%, resulting in a PEG ratio of 3.5. Based on these factors, MarketsMOJO has downgraded its stock call on Havells India to 'Hold'.