Citi upgraded Havells India to 'buy' with a ₹1,500 target, citing better growth prospects. The stock rose 2.19% following a 39.6% jump in Q4 FY26 net profit, though investors should note that this growth was partially supported by a one-time investment gain, even as the Lloyd consumer brand faced a challenging year.
What Happened
Citi has upgraded Havells India Limited from 'neutral' to 'buy', setting a target price of ₹1,500. This change in stance comes after the company reported its fourth-quarter financial results for fiscal year 2026. Following the upgrade, shares of Havells India traded 2.19% higher at ₹1,185.00 on July 1, 2026.
The brokerage indicated that a recent correction in the stock price has created a favorable entry point for investors. Citi cited improved visibility on both profit margins and long-term growth as key reasons for the bullish outlook.
Understanding the Profit Growth
Havells reported a consolidated net profit of ₹723.06 crore for the quarter ended March 31, 2026, marking a 39.63% increase compared to the same period last year. Revenue from operations showed a more modest growth of 2.47%, standing at ₹6,705.20 crore.
While the headline profit growth appears strong, investors should note that the bottom line was partly aided by a one-time fair value gain of approximately ₹283 crore. This gain stemmed from the company’s strategic investment in Goldi Solar, which was made earlier in the year. This factor is important for understanding that the profit jump is not entirely from core operational business growth.
The Lloyd Consumer Brand Challenge
While Citi remains optimistic about the overall business, the company’s consumer appliances brand, Lloyd, has faced significant difficulties. For the full fiscal year 2026, Lloyd reported a revenue decline of 23% and a loss of ₹202.95 crore, a sharp turnaround from the profit of ₹130.75 crore in the previous year.
Management attributed this drag to a delayed summer season and high inventory levels across retail channels. Because Lloyd is more seasonal—relying heavily on air-conditioners and coolers—the weak demand environment directly hurt the company's ability to use its factory capacity efficiently, leading to higher fixed costs being absorbed by lower sales volumes.
Core Business Strengths
Despite the challenges in the Lloyd segment, Citi highlighted the strength of other parts of the business. The Cables and Wires segment remains a primary anchor, posting 14% revenue growth in the quarter, largely driven by infrastructure demand. This segment helped provide stability when other parts of the business experienced pressure.
Analysts also pointed to emerging operating leverage and price-cost pass-through capabilities as drivers that could support earnings in fiscal years 2027 through 2029. The fading impact of price deflation in the Lighting segment and reduced losses from the Lloyd brand are expected to support margins moving forward.
What Investors Should Track
The key monitorables for Havells include the performance of the Lloyd brand and its ability to return to profitability. Investors may track whether the company can successfully manage channel inventory in the coming quarters, especially if summer demand patterns remain unpredictable. Furthermore, the sustainability of growth in the Cables and Wires segment, given the high infrastructure spending environment, will remain a critical metric for the company's future revenue visibility.