Neutral Havells India; target of Rs 1680: Motilal Oswal

Motilal Oswal's research report on Havells India

Havells India’s (HAVL) 1QFY26 revenue declined ~6% YoY to INR54.6b (~7% miss), driven by lower-than-expected growth in the Lloyd/ECD/lighting segments. Its EBITDA declined ~10% YoY to INR5.2b (~8% miss) due to margin contraction across segments except cables and wires (C&W), which saw margin expansion. OPM stood at 9.5% (down 40bp YoY; 20bp below est.). PAT declined ~15% YoY to INR3.5b (11% miss). Management highlighted that 1QFY26 was a challenging quarter, largely due to an unexpected weak summer and continued muted consumer demand, which impacted cooling products revenue, further compounded by a high base in the previous year. However, the C&W segment remained a bright spot, delivering strong growth supported by healthy infrastructure and industrial demand. It believes that the current challenges are transitory and remains optimistic about achieving revenue growth and margin expansion in the upcoming quarters.

Outlook

We cut our EPS estimate by ~8%/7% each for FY26/FY27E as we cut revenue and margin estimates for the Lloyd/ECD/Lighting segments. We have introduced FY28 estimates in this note. HAVL’s valuations at 60x/48x FY26/27E EPS remain expensive. We reiterate our Neutral rating with a TP of INR1,680 (based on 50x Jun’27E EPS).