Prabhudas Lilladher has released its latest research report on Havells India, assigning an 'ACCUMULATE' rating with a target price of Rs1,653. The report highlights moderate growth in Q2FY26, headwinds in the Lloyd and ECD portfolios, and an optimistic outlook for cables, wires, and solar products. Investors are advised to closely monitor inventory liquidation, margin normalization, and volume expansion in key segments. The stock's levels, financial performance, and management strategy indicate a cautiously optimistic stance for long-term investors.

Investment Rationale and Segment Performance

Havells India recorded a moderate 5.3% year-on-year revenue growth, primarily driven by cables and wires, which posted robust double-digit gains. The ECD segment, however, faced a marginal decline owing to weak summer demand for fans and air coolers. Lloyd, the air conditioning and home appliances portfolio, witnessed an 18.2% drop in revenue and reported an EBIT loss of Rs1.1bn, reflecting the segment's inventory challenges and muted summer sales.

Working Capital and Inventory Position

Elevated inventory levels in cables and Lloyd have temporarily increased working capital requirements and impacted cash balances. Havells has initiated targeted inventory liquidation strategies, expecting normalization by Q4FY26. The management projects a return to healthy inventory cycles and an improved working capital environment, providing greater flexibility for operational expansion.

Growth Engines: Cables, Wires, and Solar Portfolio

Cables delivered strong growth, registering a revenue increase of 12.4% year-on-year, while wires also posted double-digit gains. The lighting segment benefited from LED pricing stabilization, supporting healthy revenue streams. The solar products portfolio—already recording modest gains in Q2FY26—is poised for significant volume expansion in the next two quarters, as new capacity comes online.

Profitability Metrics and Margin Trends

EBITDA grew by an impressive 16.9% YoY to Rs4.4bn, with margins expanding by 90bps to 9.2%. Cables led margin expansion, with segmental EBIT surging to 13.7%—a 510bps improvement. Lighting segment margins remained flat, while Switchgear demonstrated resilience with EBIT margins climbing to 22.3%. ECD margins contracted, reflecting adverse product mix and demand trends.

Management Strategies and Capex Plans

The management continues to invest heavily in BLDC fans, capitalizing on shifting consumer preferences. Total planned capex stands at Rs14bn for FY26 and Rs10bn for FY27, supporting growth in solar, cables, and consumer durables. Pricing and GST benefits are expected to be passed on to consumers, maintaining price competitiveness.

Financial Highlights and Targets

Below is a summary table of Havells India's consolidated key financials:

Stock Levels, Valuation, and Investor Guidance

- Support Level: Rs1,360 - Resistance Level: Rs1,946 - Current Market Price (CMP): Rs1,487 - Target Price: Rs1,653 (ACCUMULATE Call)
Havells India is trading slightly below its 52-week high and well above the support level, suggesting a measured uptrend for investors who accumulate at current prices. The recommended target of Rs1,653 aligns with the company's forward valuation multiples and anticipated earnings expansion.

Shareholding Pattern and Market Standing

- Promoters: 59.41% - Foreign Investors: 22.31% - Domestic Institutions: 12.76% - Public & Others: 5.52%
A robust promoter holding and meaningful foreign institutional ownership underscore investor confidence and support the stock's premium valuation.

Outlook and Recommendations

- Investors looking for exposure to India's growing electrical and consumer durables sector should consider an incremental approach to Havells India, capitalizing on temporary inventory-led weaknesses for strategic accumulation. - The company’s ongoing capex, focus on new-age product segments, and margin stabilization are expected to drive superior shareholder returns over the next three years. - Risks to the thesis include weaker-than-expected demand recovery in Lloyd and ECD, prolonged inventory cycle, or adverse macroeconomic developments.