Brokerage firm Anand Rathi has updated its target price for Havells India to ₹1,285 following a 35% revenue growth in Q2 FY27. While the company's core electrical segments performed well, investors should watch for potential profit margin pressure due to rising raw material costs and seasonal challenges in the Lloyd consumer durable business.
Havells India reported a strong revenue performance in the second quarter of the 2027 fiscal year, with sales rising 35% compared to the same period last year. Following these results, brokerage firm Anand Rathi updated its target price for the stock to ₹1,285. The analysis reflects the company's ability to drive volume growth in its core divisions, even as broader economic conditions remain challenging.
Segment Performance and Margins
The company’s growth was driven by its core verticals, specifically Cables and Wires, and Switchgears. Management highlighted double-digit volume growth in the Cables and Wires segment, which is a key volume driver for the company. The Switchgear segment, another critical part of the business, also showed recovery as profit margins returned to more typical levels.
However, the company’s Lloyd consumer durable segment, which includes products like air conditioners, faced profitability hurdles. This segment often experiences seasonal fluctuations, and its margins were affected by a combination of under-absorption of costs and the rising expense of raw materials. While the company's overall EBITDA (operating profit) increased by roughly 30% year-on-year, the pressure on margins within the consumer durable business remains a point of attention for shareholders.
Inflationary Risks and Pricing
Raw material costs, particularly in metals like aluminum and copper which are essential for cable and wire manufacturing, remain a variable factor for the company. Volatility in these prices can create pressure on profit margins. To manage these increased costs, the company has indicated that it may implement price hikes of 5-7% across specific product categories if inflationary trends continue.
For investors, the key factor will be the company’s ability to pass these costs on to customers without significantly hurting demand. While the brokerage maintains a positive outlook based on the company's diversified portfolio and scale, the market will monitor how successfully Havells manages this pricing strategy in a competitive consumer electricals landscape. The current valuation from the brokerage is based on a 40x multiple of estimated earnings for September 2028, reflecting confidence in long-term earnings potential despite short-term margin volatility.
Investors may keep track of future quarterly updates to see if margin pressure eases or if the planned price hikes impact sales volume. Monitoring festive season demand and raw material price stability will also provide clarity on the company’s operational performance in the coming quarters.