Havells India Gets 'Neutral' Rating From Motilal Oswal, Says Valuations Rich

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Motilal Oswal Report

Investments in Lloyd have strengthened Havells India Ltd.’s price positioning and contributed to improved performance in the last few quarters. We believe the demand pick-up in coming months and the sustainability of Lloyd's margin will be the key monitorables in the near term.

Additionally, wires demand has been hit by slow real estate demand, which has also weighed on segment margins. Recovery remains a key monitorable.

We expect Havells to report a revenue/Ebitda/PAT CAGR of 14%/21%/20% over FY25-27.

We estimate operating profit margin to reach 10.9% in FY27 versus 9.8% in FY25. Its return on invested capital is expected to improve to ~28% by FY27 from 24% in FY25, and its RoE is likely to be ~20% in FY27 vs ~18% in FY25.

The stock trades at rich valuations of 57x/46x FY26/27E EPS. Hence, we reiterate our Neutral rating with a target price of Rs 1,700 (premised on 50 times FY27E earnings per share).

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