The shares of the Consumer durables company specializing in manufacturing a wide range of electrical products for residential, commercial, and industrial use, are in focus after a leading Indian brokerage firm, ICICI Securities, initiated a revised Buy target on it with a 22 percent Upside Potential.
Price action
With a market capitalisation of Rs. 99,871.82 crores on Thursday, the shares of Havells India Ltd jumped upto 0.59, making a high of Rs. 1621.45 per share compared to its previous closing price of Rs. 1611.85 per share.
Company Overview
Havells India is a leading Indian multinational electrical equipment company, known for its diverse range of products, including electrical appliances, lighting, and power distribution equipment. Established in 1958, the company has built a strong presence in both domestic and international markets. It has a wide distribution network and is recognized for its consumer-centric approach in the electrical industry.
What Happened
Solar Industries India Limited, engaged in manufacturing a wide range of electrical products for residential, commercial, and industrial use, is in focus after a leading indian brokerage firm, ICICI Securities, initiated a revised Buy Target of Rs. 1,934 on it with an upto 23 percent Upside Potential.
The reasons for the “Buy” target
- Strong Revenue Growth and Robust Financials: Havells reported a strong 20.2% YoY revenue growth in Q4 FY25, driven by segments like Lloyd and Cables. The company is expected to achieve a 14.4% revenue CAGR and 22.9% PAT CAGR from FY25- 27E, reflecting steady growth prospects.
- Growth in the Lloyd Segment: Lloyd showed impressive performance with a 39% YoY revenue growth and a shift from losses to profitability (INR 1,175mn EBIT for FY25), signaling strong recovery. As new plants come online and scale increases, the segment is expected to further improve profit margins.
- Improved Margins in Key Segments: The switchgear segment saw a recovery in EBIT margin (25.7% in Q4FY25), returning to normal levels after weak quarters, with market share expansion in both residential and industrial switchgears. The ECD segment achieved higher margins through premiumization and a better product mix, despite moderate fan growth.
- Cables Segment Recovery and Tumkur Plant Impact: The cables business performed well, driven by inventory up-stocking, higher copper prices, and the new Tumkur plant, with increased power cable sales. EBIT margins were maintained despite higher depreciation. Growth is expected to continue as demand for power and infrastructure products rises.
- Investment in High-Growth Areas (White Goods & Durables): Havells is expanding its white goods and durable products, including water purifiers and air conditioners, which have strong demand and high margins. The company’s premiumization strategy in segments like fans and ECD is expected to drive higher profitability.
- Diversified Business Model and Brand Strength: Havells’ diversified business model across lighting, cables, switchgears, and consumer durables provides resilience during sector downturns. The company’s strong brands and competitive edge in the electrical industry position it well for sustained long-term growth.
Valuation and Target Price
Despite some short-term challenges in segments like lighting, the overall growth outlook supports the revised target price of Rs. 1,935, which reflects an implied P/E ratio of 53x FY27E EPS. The DCF-based target price suggests strong upside potential from current levels, with consistent earnings growth anticipated in the coming years.
Capex plans
Havells India plans to invest Rs. 2,600 crore over the next two years, with an additional Rs. 600 crore allocated to the renewable energy sector, to drive growth across its businesses.
This includes expanding production capacities, exploring new product lines, and enhancing its presence in both domestic and international markets. The investment aims to strengthen the company’s competitive position and support its long-term growth strategy.
Segment-Wise Revenue
Havells India reported a 20.2 percent YoY growth in total revenue for Q4 FY25, reaching Rs 6,532 crores, up from Rs 5,434 crores in Q4 FY24.
Key segments saw strong growth: Cable revenue rose 21.2 percent, Switchgears grew by 6.2 percent, and Electrical Consumer Durables increased by 9.4 percent. Lloyd Consumer sales surged by 39.5 percent. Overall, the company’s diverse segments contributed to solid performance.
Financials
The company’s revenue rose by 19.8 percent from Rs. 5,517.77 crore to Rs. 6,612.28 crore in Q4FY24-25. Meanwhile, the Net profit rose from Rs. 446.7 crore to Rs. 517.83 crore during the same period.
Written by Sridhar J
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