Havells Aims To Sustain Profitability Amid Market Challenges, Says Motilal Oswal Maintaining 'Neutral' Rating

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Motilal Oswal Report

We expect Havells India Ltd. to report ~14% revenue CAGR over FY25-27. Revenue CAGR across segments is estimated as follows: Lloyd (20%), ECDs (15%), Cables and Wires (14%), Switchgears (9%), and Lighting & Fixtures (6%).

We estimate Lloyd’s margin to expand going forward, led by an increase in contribution margin in the room AC segment, positive operating leverage, and an increase in in-house capabilities for the non-AC segment (currently setting up a new refrigerator manufacturing facility in Ghiloth at a capex of Rs 4.8 billion).

We expect Havells to report an Ebitda/PAT CAGR of 21%/23% over FY25-27. Additionally, we estimate operating profit margin to reach 10.6% in FY27 versus 9.4% in FY25. RoIC is expected to improve to 29% by FY27 from 22% in FY25, and RoE is likely to be 19% in FY27 versus 17% in FY25.

The stock is trading fairly at 54x/44x FY26/27E EPS and, hence, we reiterate our Neutral rating with a target price of Rs 1,650 (premised on 50x FY27E EPS).

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