Havells India Ltd. share price target

We met with Havells’ (HAVL) management to gain insights into industry trends and the outlook for key business segments. The management remains optimistic about growth prospects across core categories, supported by margin improvement initiatives.

Havells’ EBITDA margin has declined from 12.6% in FY10 to 9.9% in FY24 and we model it to be 9.3% in FY25E. There are structural as well as cyclical/transitory reasons for the margin contractions.

High valuation unwarranted in competitive FMEG market

Fluctuating commodity prices dented domestic wire growth, resulting in overall moderated Q3 revenue growth for Havells. The festival season, though, saw improved demand. Investments in brand-building and talent were elevated in Q3, but are likely to stabilise; thus, better margins are
expected ahead with growth coming in.

Havells India (HAVL)’s 3QFY25 revenue grew 11% YoY to INR49b (in line) as better-than-expected growth in the ECD/Switchgear segments was offset by lower revenue from the C&W segment

Improved demand drove Havells’ revenue to grow 16% y/y, but margins dragged the Q2 performance. Supported by festival season offtake, we remain optimistic regarding H2 and expect margins to recover.

Q2 grew ~17% on improvement in consumer demand trends. High A&P spends and high staff cost hurt margins

Havells reported strong performance in B2C segment with 20% revenue growth YoY. Broad-based growth across segments led to strong revenues but higher operational costs weighed on margins.

Havells India (HAVL) reported weak 2Q results with 3-5pp margin miss across segments as segmental margins contracted 2-6pp YoY (excluding Lloyd where loss narrowed YoY).

Wires & cables accounted for 34% of HAVL's FY24 revenue, with capacity expansion to increase from 3.29mn km to 4.58mn km by 2026

Q1 PAT rocketed 42% y/y. Consolidated revenue ratcheted up 20% y/y to Rs58bn, driven by huge offtake in cooling products. Cable and wire revenue grew a mere 2% y/y as wire revenue was affected by the elections.

Quarterly Update Q1FY25

Healthy FY24 performance; EBITDA margin expansion of 40bps YoY; Lloyd turns profitable in Q4

Quarterly Update Q4FY24

HAVL: Healthy quarter; high valuations downgrade to HOLD. GUJS: Downgrade to Hold, decoding HP Gas grid tariff order. UTCEM: Strong growth; cost savings drive margins; maintain BUY