Havells India reported a 19.5% year-over-year revenue growth in Q1 FY27, led by its Wires and Cables division. Despite this, profitability faced pressure from higher advertising spends and commodity costs. Investors may monitor the company’s ability to improve margins through planned price increases and the performance of its new renewable energy business.
Havells India has reported a revenue growth of 19.5% year-over-year for the first quarter of fiscal year 2027. This performance comes against a backdrop of raw material price volatility and delayed seasonal demand, particularly impacting the consumer durables and cooling segments. While the top-line performance shows strong market demand, the company's profitability faced headwinds, primarily due to increased spending on advertising and higher costs for commodities like copper and aluminum.
Segment Performance and Strategic Growth
The Wires and Cables segment remains the company's largest growth driver, recording a 27% increase in revenue. Although volume growth was stable, the segment benefited from higher price realisations. However, this growth came at a cost, with segment margins declining by approximately 220 basis points compared to the previous year. To support long-term expansion, the company has earmarked about Rs 800 crore of its FY27 total capital expenditure toward increasing capacity in this division.
The Electrical Consumer Durables segment saw a revenue rise of 12%. The company is focusing on moving toward higher-value products to drive future growth. Meanwhile, the Lloyd division, which primarily sells air conditioners, faced a challenging quarter due to a delayed summer season. Despite this, management expressed optimism about margin recovery for Lloyd, aiming for double-digit figures as input costs stabilize and recent pricing adjustments begin to reflect in the balance sheet.
Renewables and Future Focus
Havells has strategically reorganized its business to establish Renewables as a distinct vertical. This segment, which covers solar products, electric vehicle chargers, and battery energy storage, is positioned as a key long-term growth engine. Notably, the company has entered the battery energy storage market through a partnership with Norway-based Pixii AS. This move is aimed at targeting commercial and industrial clients, aligning with the broader shift toward energy transition in India.
Financial Context and Risks
The company has implemented price increases of 7-8% across various product categories to offset inflationary pressures. The effectiveness of these price hikes remains a primary area for investors to watch, especially in price-sensitive segments. Additionally, the company is investing Rs 200 crore into a new research and development center to foster innovation. With the stock currently trading at approximately 37 times its estimated earnings for FY28, the company maintains a higher valuation than several of its sector peers. Key monitorables for investors include the stabilization of raw material costs, the actual utilization of new cable capacity, and the recovery of export-oriented segments like switchgear, which were recently affected by shipping disruptions in West Asia.