Synopsis: Shares of this FMEG company fell over 6 percent after brokerage downgrades on weak demand, margin pressure, and Lloyd losses, with limited earnings visibility despite support from cables and seasonal products.
The share of this company, which has a strong global presence, is in the manufacturing, industrial, and domestic circuit protection, cables, wires, motors, fans, modular switches, and home appliances, came under pressure after brokerage cuts target with concerns on margin.
With a market capitalization of Rs 79,454 crore, Havells India Ltd’s shares on Thursday made a day low of Rs 1,260.25 per share, down 6.6 percent from its previous day’s close price of Rs 1,350.50. The shares of the company have given a return of 26 percent in the last five years.
Brokerage view
Brokerages remain cautious on Havells India, with multiple downgrades and target price cuts amid weak demand, margin pressure, and Lloyd losses. While cables and summer products offer some support, earnings visibility remains limited, and valuations continue to stay elevated.
HDFC Securities on Havells India
HDFC Securities downgraded the stock to Add with a revised target price of Rs 1,470, citing weak 2 percent revenue growth, margin pressure, and delayed demand recovery, leading to earnings cuts and a cautious near-term outlook.
Demand & Revenue Weakness: Revenue growth remained muted at 2 percent year-on-year, largely impacted by weakness in the Lloyd segment. Seasonal demand for summer products was delayed, with recovery expected only later in April, reflecting subdued consumption trends and slower pickup across key categories.
Margins & Valuation Pressure: Margins contracted due to lower gross margins and rising input costs, impacting profitability. The brokerage cut earnings estimates to factor in cost headwinds and weak demand, while maintaining valuation at 45x Mar-28E EPS, indicating limited upside amid near-term challenges.
Morgan Stanley on Havells India
Morgan Stanley downgraded the stock to Underweight from Equal-weight, cutting the target price to Rs 1,171, citing weak earnings visibility, rising competition, and continued pressure across key segments and margins.
Earnings Visibility & Segment Weakness: The brokerage highlighted weak earnings visibility due to macro pressures and competitive intensity. Performance across key segments including Lloyd and cables & wires remained subdued, raising concerns over sustained growth and limiting near-term upside potential.
Margins & EPS Cuts: Focus on maintaining market share is expected to keep margins under pressure. Morgan Stanley cut EPS estimates by around 11–12 percent for FY27 and FY28, while valuing the stock at about 36x Mar-28E P/E, reflecting a cautious stance on profitability.
Goldman Sachs on Havells India
Goldman Sachs maintained a Buy rating with a reduced target price of Rs 1,640, noting weak quarterly revenue but expecting recovery in cooling products, supported by some margin stability from inventory-related gains.
Revenue Trends & Demand Outlook: Q4 revenue remained weak across most segments except solar, reflecting demand softness. However, the brokerage expects a near-term recovery in cooling products, supported by seasonal demand, which could aid revenue growth going forward.
Margins & Earnings Outlook: Margins saw some support from inventory gains despite pressure on gross margins. Goldman Sachs highlighted a mixed earnings outlook due to cost pressures and demand uncertainty, but maintained a positive stance backed by recovery expectations.
Jefferies on Havells India
Jefferies maintained a Hold rating with a target price of Rs 1,290, highlighting strong performance in cables & wires offsetting weakness in consumer products, while Lloyd continued to report losses.
Segment Performance & Growth Drivers: The cables & wires segment emerged as a key bright spot, with strong sales traction partially offsetting declines in consumer products. However, the Lloyd segment remained weak, reporting EBIT losses for the fourth consecutive quarter.
Valuation & Earnings Outlook: Jefferies estimates earnings to grow at a 20 percent CAGR over FY26–28, but notes valuations remain about 5 percent above the 10-year average. This limits upside potential, supporting its neutral stance despite steady long-term growth expectations.
Segment Update
Weak Growth in High-Margin Segments: Havells India saw limited traction in its high-margin segments, with Switchgears growing only 6.4 percent YoY and Lighting & Fixtures nearly flat at 0.5 percent. This weak growth in premium segments restricted overall margin expansion despite stability in contribution levels.
Lloyd Drag and Margin Imbalance: At the same time, Lloyd margins dropped sharply to 8.4 percent from 14 percent YoY, weighing on overall profitability. While cables supported margins, the lack of strong growth in high-margin segments and continued Lloyd weakness kept overall margins under pressure.
About the Company
Havells India Limited is a leading Fast Moving Electrical Goods Company and a major power distribution equipment manufacturer with a strong global presence. The company has a market dominance across a wide spectrum of products, including Industrial & Domestic Circuit Protection Devices, Cables & Wires, Motors, Fans, Modular Switches, Home Appliances, Air Conditioners, Electric Water Heaters, Power Capacitors, Luminaires for Domestic, Commercial and Industrial Applications
Financial Highlights: The revenue from operations grew by 2 percent to Rs 6,705 crore in Q4 FY26 from Rs 6,544 crore in Q4 FY25, while EBIDT declined by 4 percent to Rs 729 crore in Q4 FY26 from Rs 757 crore in Q4 FY25. This was accompanied by a net profit growth of 40 percent to Rs 723 crore in Q4 FY26 from Rs 517 crore in Q4 FY25, resulting in an EPS growth of 40 percent to Rs 11.53 per share in Q4 FY26.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
