ICICI Securities has maintained its 'Buy' rating on Havells India but revised the price target to ₹1,500. While the company is seeing solid volume growth across its product segments, it faces profit margin pressure due to high raw material costs in its cables, wires, and Lloyd consumer durables business. The firm now plans further price hikes to maintain profitability.
ICICI Securities has maintained its 'Buy' rating for Havells India but lowered its price target to ₹1,500 from the previous ₹1,600. This adjustment reflects a cautious view on the company's short-term profitability, even as it continues to report strong consumer demand in its latest performance report.
Havells India reported a strong performance in the second quarter of the 2027 fiscal year, with consistent volume growth in its core switchgear and cable segments. This volume momentum suggests that demand for the company's electrical products remains resilient despite a challenging business environment marked by volatile raw material costs.
However, investors are watching the company’s profit margins closely. The cables and wires division, a significant revenue contributor, has been hit by the volatility in aluminum prices. Because the domestic market relies heavily on this metal, fluctuations directly impact the costs of production, making it difficult for the company to keep margins stable. Similarly, the Lloyd brand—which deals in consumer durables like air conditioners—has seen revenue improvements but continues to struggle with profitability due to seasonal demand shifts and the ongoing impact of rising raw material costs.
To manage these cost pressures, Havells has already implemented price increases of over 30% in its cables and wires portfolio and between 10% and 15% across other categories over the past year. Management has indicated that further price adjustments of 5% to 7% might be necessary in the third quarter to protect margins. Additionally, the company has transitioned to a 'pull-led' distribution model, aiming to focus more on direct consumer demand rather than pushing products into the distribution channel.
The brokerage has valued the stock based on a discounted cash flow model, reflecting an estimated price-to-earnings multiple of 46 times projected fiscal year 2028 earnings. For investors, the key monitorables are the company’s ability to successfully pass on these input costs to consumers without hurting demand volume, and how quickly the Lloyd segment can improve its profitability margins amidst competitive pricing pressures in the consumer goods sector.