Havells India growth momentum supported by cable expansion and resilient consumer demand

Investment View and Valuation

ICICI Securities’ October 23, 2026 results update maintains a BUY recommendation on Havells India following a strong Q2FY27 performance and continuing long-term growth opportunities from brand strength, distribution reach, cable capacity additions and renewables.

The broker has revised its DCF-based target price to Rs 1,500 from Rs 1,600. The revised target implies 46x FY28E EPS. ICICI Securities forecasts revenue and PAT CAGRs of 17.7 per cent and 18.0 per cent, respectively, over FY26 to FY28E, supported by strong free cash flow generation.

Q2FY27 Financial Performance

Havells reported Q2FY27 revenue of Rs 6,432 crore, up 34.6 per cent YoY, while EBITDA rose 30.8 per cent YoY to Rs 573 crore and adjusted PAT increased 11.4 per cent YoY to Rs 349 crore. Revenue declined 1.3 per cent QoQ.

Gross margin, EBITDA margin and PAT margin contracted by 426 bps, 26 bps and 113 bps YoY, respectively, because of elevated commodity costs and a change in revenue mix. EBITDA margin was 8.9 per cent against 9.2 per cent a year earlier, although it improved from 7.2 per cent in Q1FY27. Advertising spend was normalised at about 2.1 per cent of sales in Q2FY27, which helped cushion the EBITDA margin.

Demand, Pricing and Distribution

Management stated that consumer demand remained steady despite inflation. Cumulative price increases during the previous 12 months were about 30 per cent in Cables and Wires and 10-15 per cent in certain other categories. Management indicated that an additional 5-7 per cent increase may be necessary in selected categories in Q3FY27 if input-cost inflation persists.

Havells has largely completed its shift to a pull-led distribution model, focusing on consumer demand rather than channel loading.

Business Segment Performance and Growth Drivers

Cables and Wires

Volume growth was close to double digits, but aluminium-price volatility affected contribution margins. Management said H1FY27 contribution margin of about 15 per cent remained broadly in line with the long-term average.

Around 80-90 per cent of Havells’ cable sales come from India, where the portfolio is aluminium-heavy. Cable expansion is on track and the remaining capacity is expected to become operational within 18 months, principally in medium-voltage and high-voltage cables. Management expects healthy underground-cable growth as added capacity broadens the customer base.

ICICI Securities views the expanded capacity as a strong growth platform, although competitive intensity and commodity volatility remain important watch factors.

Switchgears

Switchgears reported revenue and EBIT growth of 31.3 per cent and 49.4 per cent YoY, respectively. The recovery reflected improving underlying demand, market-share gains and close to double-digit volume growth.

Exports account for about 15 per cent of segment revenue, and management expects the trend to continue. Earlier pricing actions are feeding into realisations, allowing contribution margins to recover towards the normal range.

Lloyd

Lloyd’s revenue grew 28.5 per cent YoY on volume recovery and pricing, but the segment remained loss-making with EBIT margin of negative 17 per cent due to raw-material inflation and seasonal under-absorption.

Room air conditioners represent about 75 per cent of Lloyd’s business. Management aims to reduce this share to about 60 per cent by expanding non-RAC categories, thereby reducing seasonality.

Refrigerator growth has been encouraging after Lloyd’s own factory was commissioned in March 2026, though management expects the full benefit of in-house manufacturing in the next summer season.

Renewables

Renewables revenue rose 443.9 per cent YoY from a low base. Havells is building a consumer-facing, branded and distribution-led renewables business through system integrators, distributors and dealers, with manufacturing support from its Goldi Solar partnership.

ICICI Securities believes the company’s brand and channel capabilities provide a differentiated route to scale.

Estimate Revisions and Key Risks

The broker raised FY27E and FY28E revenue estimates by 2.3 per cent and 3.3 per cent, respectively. However, it cut EBITDA estimates by 3.2 per cent and 0.6 per cent and EPS estimates by 6.8 per cent and 3.1 per cent, respectively.

Key risks include a sharp increase in commodity prices, greater competitive pressure, unsuccessful new-product launches and delays in commissioning new plants.