After the solid results, is Havells a stock worth buying into?

For the Sep-20 quarter consumer goods giant, Havells reported 10.16% higher sales revenues at Rs.2459 crore. Operating profits for the quarter almost doubled to Rs.363 crore while net profits were 82% higher at Rs.362.4 crore.

Let us now look at the margins. OPM was up more than 650 bps at 14.75% on the back of strong and steady growth in sales revenues. NPM for the quarter was higher by 500 basis points at 13.27%. Other income compensated for the higher tax burden.

COVID had a serious impact on the Jun-20 quarter performance and hence sequential profit growth may not be too relevant. The fact is that Havells has recouped most of the losses of COVID-19 in terms of business volumes.

Because of a low debt equity ratio of 0.23, debt service coverage ratio or DSCR stands at 7.75 and interest service coverage ratio or ISCR stands at 17, reducing financial risk çonsiderably.