Havells India Research Report

Company Overview

Havells India (HAVL) is a leading electrical equipment company with a diverse portfolio of products, including cables, wires, and solar solutions.

Recent Interaction with Management

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Our recent interaction with HAVL's management highlighted several key points:

• Raw Material Inflation: In the Consumer and Wiring (C&W) segment, raw material inflation remains a headwind, leading to a quarterly contraction in margins due to the unwinding of lower-cost inventory in Q4.
• Capacity Utilization: Capacity utilization is mixed, with wires operating at approximately 65% and cables at over 90%. The upcoming cable plants in Rajasthan and Bengaluru (by September 2026) are expected to support medium-voltage expansion and entry into high-tension (HT) categories.
• RAC Business: The Residential Air Conditioner (RAC) business is witnessing subdued demand, with secondary sales yet to recover despite normalization of channel inventory. A delayed summer and cautious dealer sentiment remain near-term constraints.
• ECD and BLDC Portfolio: The Electrical Consumer Durables (ECD) portfolio remained stable with selective price hikes offsetting inflation. The Brushless DC (BLDC) portfolio continues to drive premiumization, accounting for approximately 25-30% of fan revenues, with seasonal channel inventory build-up.
• Solar Business: The solar business is emerging as a new growth lever, with strengthened leadership and a favorable industry structure enabling end-to-end residential solutions amid rising investment momentum.

Outlook

We expect HAVL to report a revenue/EBITDA/PAT compound annual growth rate (CAGR) of 14%/22%/23% over FY26-28. We estimate operating profit margin (OPM) to reach 10.8% in FY28 versus 9.5% in FY26. The stock trades at a multiple of 45x/37x FY27/28E earnings per share (EPS). We value the stock at 42x FY28E EPS to arrive at our target price of INR1,490.

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Recommendation

We reiterate a Neutral rating on Havells India.