Havells India Q3 Surge: Dolat Capital Maintains 'Add' Rating, Lifts Target Price

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AuthorAarav Shah|Published at:
Havells India Q3 Surge: Dolat Capital Maintains 'Add' Rating, Lifts Target Price
Overview

Havells India reported a 14.3% YoY revenue increase in Q3 FY26, driven by strong performance in cables, wires, and solar products. Despite commodity inflation headwinds and muted Lloyd sales, EBITDA margins expanded by 50 basis points. Dolat Capital maintains an 'Accumulate' rating and revises its target price to ₹1,630, citing anticipated margin expansion through cost discipline and demand recovery.

Q3 Performance Highlights

Havells India posted robust Q3 FY26 results, with total revenue climbing 14.3% year-over-year. This growth was predominantly driven by a significant 33% surge in both its cables and wires segment and the 'other' category, which includes solar products. The electrical consumer durables (ECD) segment saw a 4.2% increase, aided by timely winter demand for heating products. The switchgear division registered an 8.2% uplift, while the lighting segment experienced a 3.5% decline, attributed to the earlier festive season. However, the Lloyd's brand continued to face challenges, posting a 5.6% contraction in sales and an operating loss of ₹60.4 crore, impacted by a weak summer season.

Margin Expansion and Outlook

Despite segment-specific pressures, Havells India achieved a 50 basis point expansion in its EBITDA margins, reaching 9.2% for the quarter. Key segments like cables & wires, ECD, switchgears, and others saw substantial Ebit margin improvements ranging from 80 to 370 basis points. Conversely, the lighting segment's Ebit margins contracted by 350 basis points. Management expressed optimism regarding a gradual demand recovery, acknowledging ongoing industry headwinds such as commodity price inflation and evolving regulatory frameworks. Havells India is focusing on margin improvement through stringent cost rationalization measures and calibrated price adjustments. The company anticipates room air conditioner inventory to normalize by March 2026.

Brokerage Re-evaluation

Following the quarterly update, Dolat Capital analysts revised their Earnings Per Share (EPS) estimates for Havells India. FY26E EPS was adjusted down by 4% to ₹25, FY27E EPS saw a 1% reduction to ₹31, and FY28E EPS was kept flat at ₹37. The brokerage firm maintained its 'Accumulate' rating on Havells India shares. The target price has been revised upwards to ₹1,630, reflecting a valuation multiple of 44 times FY28E EPS. This outlook is underpinned by expectations of sustained cost discipline and gradual demand recovery over the fiscal years 2026 to 2028.

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