ICICI Securities Maintains Buy Rating for Havells India, Sets Price Target at Rs 1615
Havells India Poised for Stronger Growth in FY27
A recent research report by ICICI Securities highlights the potential for Havells India to emerge stronger in the upcoming fiscal year, FY27. The company faced transitory issues in FY26, including a loss of volumes in summer products due to a muted summer and prolonged monsoon, changes in Bureau of Energy Efficiency (BEE) norms in room air conditioners (RAC) and fans, and a ~40% inflation in copper and aluminium. Additionally, the Mar'26 month was affected by the Middle East war.
Despite these challenges, ICICI Securities believes that FY27 will be driven by several factors. Firstly, the favourable base and El Nino effect are expected to drive steep growth in summer products. Secondly, a price hike of 5-20% across products, with a portfolio-level increase of more than 10%, is likely to be a key driver of growth. This, in turn, is expected to lead to Havells gaining market shares in FY27, as smaller and unorganised players tend to suffer more during high inflationary periods.
The research report also notes that EBITDA margins in FY26 (9.8%) are near the bottom level in the past decade. With potential mid-teens revenue growth and operating leverage, ICICI Securities models margins to expand. Furthermore, the stock is trading below its Mean P/E-1SD, indicating a margin of safety at current valuations.
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Revenue and PAT Growth Projections
| Fiscal Year | Revenue Growth | PAT Growth |
|---|---|---|
| FY26-28E | 15.3% | 23.0% |
The research report models Havells to report revenue and PAT compound annual growth rates (CAGRs) of 15.3% and 23.0%, respectively, over the period of FY26-28E. With strong free cash flow (FCF) generation, ICICI Securities has revised its discounted cash flow (DCF)-based target price for Havells to INR 1,615, which is lower than its earlier estimate of INR 1,725. This implies a price-to-earnings (P/E) ratio of 47x for FY28E earnings per share (EPS).
Investor Takeaway
Investors should retain a buy rating for Havells India due to its potential for growth and margin expansion.
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