Havells faces wire-margin pressure as UltraTech expands Ultravolt distribution
Havells India Ltd.
ADD
-
₹1,045.9
₹1,250
-
Rating and Valuation Update
Kotak Securities’ Private Client Group sector update dated September 7, 2026 maintains an ADD rating on Havells India Limited but reduces its fair value to Rs 1,250 from Rs 1,325.
The report focuses on the Indian wires and cables sector following UltraTech’s formal launch of its Ultravolt wires and cables brand. Kotak has reduced the target valuation multiple for Havells to 38x September 2028E price-to-earnings, from 40x previously, reflecting greater competitive risk than initially anticipated.
| Valuation metric | Previous | Revised |
|---|---|---|
| Fair value | Rs 1,325 | Rs 1,250 |
| Target price-to-earnings multiple | 40x September 2028E | 38x September 2028E |
UltraTech’s Ultravolt Entry
Kotak notes that UltraTech aims to become a top-two wires and cables player within five years. Ultravolt plans to extend its offering across the voltage chain, beyond wires and low-tension cables.
Its distribution build-out targets 100,000 outlets, supported by more than 20 distribution centres and a 24-hour service proposition covering about 80 per cent of demand. The entrant is also pursuing differentiated electrician and influencer engagement programmes.
These developments are the central reason for Kotak’s more cautious valuation stance on Havells and other incumbents.
Competitive Pressure in Wires
The broker estimates that incumbent wire capacity in India is operating at sub-optimal utilisation. Incremental supply from new entrants, including UltraTech, could equal more than half of incremental demand over the next few years.
Kotak believes wire margins for incumbents could come under pressure from increased media spending and adverse terms of trade even if UltraTech does not adopt aggressive pricing. Its sector assumptions already incorporated 200–250 basis points of margin compression in wires for incumbents.
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Cables Outlook and Sector Considerations
Kotak sees cables as relatively better protected than wires because domestic and export-market demand trends remain supportive. Product qualifications, project references and customer-approval cycles also create higher entry barriers.
However, the report flags a recent slowdown in domestic volume growth that needs monitoring. It also identifies steep commodity inflation as a sector consideration.
- A correction in commodity prices from near-peak levels could hurt absolute sector profitability.
- Unprecedented capacity additions by incumbents and new entrants could compress margins if combined domestic and export demand does not keep pace.
Basis for the Revised Fair Value
The revised Rs 1,250 fair value for Havells is based on a lower 38x September 2028E price-to-earnings multiple rather than a disclosed revision to earnings estimates.
The report does not provide Havells-specific quarterly financial results, management commentary, operating performance, earnings forecasts or a current market price.
Key Downside Considerations
- Heightened competition in the wire industry, including the entry of UltraTech’s Ultravolt brand.
- Excess supply arising from incumbent and new-entrant capacity additions.
- Potential margin pressure from higher media spending and adverse terms of trade.
- Softer domestic volume growth, particularly in cables.
- Normalisation or correction in commodity prices from near-peak levels.
Disclaimer: This is a summary of a research report published by the broker/research house identified above. The views, recommendations, target prices and estimates are those of the respective broker and do not represent DSIJ investment advice. The summary may be AI-assisted, hence please refer to the original report for complete details, disclosures and risks.
