Whalesbook
Q3FY26 Performance Driven by W&C Segment
Havells India reported moderate growth for the third quarter of fiscal year 2026. The electrical goods manufacturer saw its W&C (Wires & Cables) segment expand by an impressive 32.8%. This robust performance was underpinned by sustained growth in cables and significant volume expansion across its product lines.
Market Share Gains and ECD Segment Trends
The company managed to maintain its market share across crucial product categories. Furthermore, Havells is likely gaining ground in the lighting products segment. In the Electrical Consumer Durables (ECD) division, demand for heating products saw a substantial uptick, benefiting from a favorable winter season. Channel inventory for cooling products, however, is continuing its normalization process.
Inventory Management and Pricing Strategies
Old inventory in Room Air Conditioners (RAC) and fans is anticipated to be cleared over the coming quarters. This process is expected to conclude by May 2026, aligning with the summer season. Havells is contemplating a price increase of approximately 5-10% for RACs in the fourth quarter of FY26. This potential hike will be offset by a GST-related price reduction, aiming to maintain competitive positioning.
Capacity Utilization and Capex Plans
Capacity utilization for wires stands at around 65-70%, while the cables segment is operating at near full capacity, between 90-100%. Looking ahead, the company has guided for capital expenditure of approximately ₹10 billion in FY27. This investment will largely target a new Research and Development (R&D) center and further expansion of the W&C segment.
Future Outlook and Valuation
Ongoing capex at the Sri City facility for RAC and other white goods remains focused on the domestic market, though the company continues to explore export opportunities. Analysts estimate a revenue, EBITDA, and PAT CAGR of 11.9%, 12.7%, and 13.2% respectively for FY25-28E. Revenue CAGR for ECD, Cables, and Lloyd is projected at 8.4%, 18.6%, and 5.3% respectively over the same period, with EBITDA margins expected to reach 10.0% by FY28E, a 20 basis point improvement.
Recommendation and Target Price
Prabhudas Lilladher maintains its 'ACCUMULATE' rating on Havells India. The target price remains unchanged at ₹1,634, derived from a Discounted Cash Flow (DCF) valuation. This target implies a price-to-earnings (P/E) multiple of 48 times FY28E earnings.