Havells India Ltd. share price target

Havells India’s (HAVL) 3QFY26 earnings were below our estimate due to the weak performance of Lloyd and lower margins in the cable & wire (C&W) and lighting segments.

We remain positive on Havells although the near-term outlook is likely to be soft due to weak demand for air conditioners and potential impact on earnings due to change in BEE norms in Jan’26 in fans and air conditioners.

Affected by an 18% y/y drop in Lloyd (and 2% in ECD), though offset by 12% y/y growth in cables & wires and 8% in switchgear, Havells’ Q2 was weak. ECD and Lloyd were hit by softer seasonal demand but would recover from Q3 as inventories normalise and festival demand booms.

We remain constructive on Havells, as its FY25 annual report indicates aggressive investments across key business parameters such as R&D, distribution, branding and capex.

We downward revise Havells FY26/27 earnings by 6.4%/6.0% to factor in the weak performance of Lloyd and ECD in current quarter, heavy compliance cost and pressure from inventory liquidation .while Havells reported strong growth in W&C segment with a volume growth of 20-21%. ECD and Lloyd segment declined due to unseasonal rains, product mix change and weak summer. Inventory levels of RAC are high at company level, which is expected to normalize in coming quarters. Company plans to double its underground cable capacity by FY27, with its new Tumkur facility already ramping up production,...

While the impact of early monsoon on off-take of RAC, fans and coolers was higher-than-expected, we believe the impact is transitory in nature and there is negligible impact on long-term value creation.

Havells India’s (HAVL) 1QFY26 revenue declined ~6% YoY to INR54.6b (~7% miss), driven by lower-than-expected growth in the Lloyd/ECD/lighting segments.

Havells India’s (HAVL) FY25 annual report emphasizes its strategic focus on innovation, capacity expansion, market penetration, and digital transformation. The expansion of omni-channel distribution, particularly in rural markets and modern trade, has further strengthened the brand reach.

Going ahead, demand from the real estate and construction sectors will drive volumes of cables & wires. Further, The recent changes in income tax slab rates are anticipated to boost discretionary spending. While restocking and seasonal factors will drive overall growth going ahead....

Havells reported stronger-than-expected Q4FY25, partially led by higher trade inventory up-stocking in air conditioners. There is strong revenue growth of 39% in Lloyd. While there is healthy growth in primary sales, the company believes there is a possibility for slowdown in secondary sales in Q1FY26.

Q4 Revenue grew 20% YoY/34% QoQ, driven by strong performances in Lloyd (+39% YoY) and C&W (+21% YoY)

Lloyd reported growth of 39.5% YoY, aided strong volume gr. in RAC segment. We downward revise Havells India's (HAVL) FY26/FY27E earnings by 2.0%/2.6% to factor in the soft margins commentary related Cable & Lloyd businesses and downgrade our recommendation to HOLD' from BUY', in view of the significant run-up in stock price in the near past. Havells reported strong results, primarily driven by robust growth in the Cables and Lloyd segments, though future momentum appears cautious. RAC segment expected limited growth due to delayed summer, high primary sales in Q4FY25, and slowdown...

Havells’ robust Q4 results were led by strong, 21% y/y, growth in cables and Lloyd’s 39% y/y revenue increase. We expect cost-saving steps and operating leverage to expand margins and profitability for Lloyd. The ramp-up of the new cable capacity will further add to growth.

Havells India (HAVL)’s 4QFY25 revenue grew 20% YoY to INR65.4b (5% beat), led by better-than-expected growth in the Lloyd/C&W segments. Higher margins in the Lloyd and ECD segments have resulted in ~19% YoY EBITDA growth to INR7.6b (+17% vs. our est.).

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.