Buy Havells India; target of Rs 1935: ICICI Securities

ICICI Securities research report on Havells India

Havells reported stronger-than-expected Q4FY25, partially led by higher trade inventory up-stocking in air conditioners. We note: (1) 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. (2) Cables reported strong revenue growth of 21.2% YoY led by normalisation of trade inventory, higher copper prices and increase in sales of power cables led by commencement of Tumkur plant. (3) Deflation in LED prices led to the 10th straight quarter of revenue growth less than 5%. Lighting margins also contracted 161bps YoY. (4) Switchgear EBIT margin reverted to its normalised level of 25.7% in Q4FY25, after weak margins in Q2FY25 and Q3FY25. (5) ECD reported moderate revenue growth of 9.5% led by lower-than-expected revenue growth in fans. However, premiumisation led to superior margins of ECD Segment YoY.

Outlook

We believe there is a possibility of a soft Q1FY26, if the summer season remains weak especially in South India. We stay positive on Havells given its diversified business model, established brands and sub-segmentation strategy. At our DCF-based revised TP of INR 1,935, the implied target P/E works out to 53x on FY27E.

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