Havells India downgraded to 'Hold' by MarketsMOJO, strong financials but caution advised

Havells India, a leading player in the cable industry, has recently been downgraded to a 'Hold' by MarketsMOJO on October 7, 2024. This decision was based on 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 June 2024 quarter, with its OPERATING CF(Y) at a record high of Rs 1,952.89 Cr, DPR(Y) at 44.39%, and CASH AND CASH EQUIVALENTS(HY) at Rs 3,038.17 cr. These factors indicate a strong financial position for Havells India.

Technically, the stock is currently in a Mildly Bullish range, with its MACD and KST technical factors also showing a Bullish trend. Furthermore, the company has a high institutional holding of 34.72%, indicating that these investors have better capability and resources to analyze the fundamentals of companies compared to retail investors.

With a market cap of Rs 1,21,183 cr, Havells India is the largest company in the cable industry, constituting 36.36% of the entire sector. Its annual sales of Rs 19,562.42 are also significant, accounting for 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 higher than its average historical valuations, indicating that the stock is currently trading at a premium.

Despite generating a return of 37.06% over the past year, the company's profits have only risen by 24.7%, resulting in a PEG ratio of 3.5. This suggests that the stock may be overvalued and investors should exercise caution before making any investment decisions. Overall, while Havells India remains a strong player in the cable industry, it is currently recommended to be held rather than bought.