Shares of Havells India edged up 0.68% to Rs 1,195.40 on Monday, following Anand Rathi’s decision to keep its Buy rating while lowering the target price to Rs 1,379 from Rs 1,447. The revised target suggests an upside of about 15% from the current market price.
In the first quarter of FY27, Havells posted consolidated revenue of Rs 65 billion, a 19.5% year‑on‑year increase. The Cables & Wires division led growth with a 27% rise, while Lloyd revenue grew 15% and Electrical Consumer Durables (ECD) grew 12%. The Renewables business showed robust revenue growth, but the mix of lower‑margin solar panels and higher‑margin inverter sales moderated overall profitability. Switchgear sales fell 4% year‑on‑year, affected by geopolitical disruptions and input price volatility.
Profitability pressures were evident as the EBITDA margin contracted by 230 basis points to 7.2%, and the profit after tax (PAT) fell 17% to Rs 2.9 billion. Anand Rathi attributed the decline to a doubling of advertising and promotion spend year‑on‑year, which weighed heavily on EBITDA.
The company’s management expects advertising expenditure to normalize in the coming quarters of FY27, with margins recovering as recent price hikes are passed through to customers. Havells has implemented price increases ranging from 5% to 20% across its product categories.
Havells has guided a capital expenditure of Rs 14 billion for FY27. Anand Rathi notes that earnings recovery will be gradual, citing key factors such as margin recovery in Lloyd, stable raw material prices, execution of planned capacity additions, and scaling of the Renewables business.
The brokerage projects a compound annual growth rate of 13% for revenue and 8% for PAT over FY26‑FY28E, adjusting its EBITDA and PAT estimates for FY27E and FY28E to reflect a slower earnings recovery.
Despite the revised outlook, Anand Rathi maintains a BUY rating on Havells, with the revised target price of Rs 1,379 valuing the company at 45 times FY28 earnings per share. The newly created Renewables segment is seen as a meaningful long‑term growth avenue, offering opportunities in solar, battery energy storage systems, EV charging, and other energy‑transition initiatives.
Overall, analysts remain optimistic about Havells’ long‑term prospects, while cautioning investors to monitor the company’s profitability recovery and execution of its growth plans.