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Havells Hold Recommendation Rests on Recovery and Margin Improvement
Havells makes products such as cables, switches, lights, and air conditioners.
Its sales grew mainly because it raised prices to cover more expensive materials.
However, the company did not sell many more products, so its profit margins stayed weak.
The cables and wires business is doing well because infrastructure projects and new industries need more cables.
The air-conditioner business had a difficult year because the summer was weaker than expected.
Havells expects this business to improve as inventories return to normal and demand recovers.
The company is also expanding into solar products and electric-vehicle charging equipment.
Analysts expect profits to remain broadly flat in FY27 but improve more strongly in FY28.
Because the stock price has fallen and future growth may improve, the recommendation is to hold the shares.
Havells reported pricing-driven revenue growth, but higher raw-material costs and weak volumes kept margin improvement muted.
Cables and wires and switchgears, which generate about half of revenue, are performing better than consumer-facing businesses.
Cables and wires revenue rose 27% year over year in Q1FY27, although volume growth was flat due to higher copper prices.
Lloyds’ cooling business declined 22% in FY26 after weak summer demand, but normalized inventory and warmer weather could support recovery.
The stock trades at about 40 times one-year forward earnings versus a five-year average of 52 times, supporting a hold recommendation.
- Who
- Havells, a diversified consumer-durables manufacturer, and its Lloyds division.
- What
- The company received a hold recommendation as investors await stronger volume growth and margin improvement.
- Where
- The article discusses Havells’ business segments, exports through Middle East shipping lanes, and demand in infrastructure, solar, data centers, power, and real estate markets.
- When
- The analysis was published on September 5, 2026; it discusses FY26, Q1FY27, FY27, and FY28.
- Why
- The recommendation reflects moderated valuation, expected recovery after a weak year, and the possibility that lower commodity-price pressure and higher volumes will improve margins.
Key facts
- Recommendation
- Hold the stock.
- Stock performance
- The stock is down 25% since the previous recommendation in February 2025.
- Valuation
- About 40 times one-year forward earnings, compared with a five-year average of 52 times.
- Cables and wires
- Revenue grew 27% year over year in Q1FY27, while volume growth was flat.
- Lloyds revenue
- Revenue declined 22% in FY26 after a 31% revenue CAGR during FY22-FY25.
- EBITDA margin
- The margin fell from 12.7% in FY22 to about 10% in FY26 and 7.2% in Q1FY27.
- FY27 capex
- Havells plans approximately ₹1,000 crore of capital expenditure, mainly for cables, refrigeration, and research and development.
Sources
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