Prabhudas Lilladher suggests an accumulate rating for Havells India with a target price of Rs 1212. The company reported 34.6% revenue growth, supported by strong demand across many categories. While raw material costs hit margins, management said they plan further price hikes of 5-7% in Q3FY27 to manage these expenses.
Prabhudas Lilladher's research report on Havells India Havells reported 34.6% YoY revenue growth, supported by broad-based growth across categories and steady consumption demand despite elevated raw material costs. Cables revenue grew 47.9% YoY, driven by commodity-linked price increases and a favourable mix, while volumes grew close to double digits; however, EBIT margin declined to 10.2% YoY due to aluminium price volatility. Switchgears grew 31.3% YoY, supported by a pickup in domestic demand and recovery in exports. ECD revenue grew 10.7% YoY, while Lighting & Fixtures grew 7.3% amid price stabilisation, although margins remained soft due to certain project orders. Renewables revenue grew 147.8% YoY, with margins improving on a better product mix as it focuses on a brand and distribution-led strategy. Lloyd growth was driven by volume and price growth, while profitability remained subdued due to raw material inflation and seasonal underabsorption while management aims to achieve profitability in the medium term. A&P spends normalised to 2.1% of revenue from 4.4% in Q1FY27, Management indicated that prices have been increased by 10-25% across products over past 12 months, with further calibrated hikes of 5-7% planned in Q3FY27. Management retained a positive outlook on festive-season demand and margins, with FY27 capex guidance at INR14bn, primarily towards cables and R&D centres. We estimate revenue/EBITDA/PAT CAGR of 15.7% / 14.1% / 14.4% with ECD/Cables/Lloyd revenue CAGR of 6.8%/18.7%/15.3% over FY26-29E and EBITDA margin of 9.4% by FY29E. Outlook We downward revise our FY28/29 earnings estimates by 8.6%/6.3% factoring in raw material inflation and continued margin pressure. We downgrade to 'ACCUMULATE' rating from 'BUY' with a revised TP of INR1,212 (earlier INR1,309) based on DCF, implying 38x Sep'28E earnings. For all recommendations report, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Havells India - 2310026 - prabhu