Havells India Share Price Target at Rs 1,800: ICICI Securities
ICICI Securities has reiterated its BUY rating on Havells India, setting a target price of Rs 1,800, representing an 18% upside from the current market price of Rs 1,521. The brokerage firm highlights margin pressures in the near term but expects a mean reversion in EBITDA margins over FY25–FY27. Key drivers for this forecast include operational leverage in cables and wires, stabilization of commodity prices, and premiumization strategies. The report also underscores that while Lloyd, the company’s consumer durables brand, has been a drag on overall margins, it is expected to break even by FY27. Below, we break down the key insights from ICICI Securities' analysis.
Challenges in EBITDA Margins and Future Recovery
Declining Margins: Havells' EBITDA margin has shrunk from 12.6% in FY10 to 9.9% in FY24, with a further expected decline to 9.3% in FY25.
Structural and Transitory Issues: The margin decline stems from intensified competition in Electrical Consumer Durables (ECD), technological shifts, and lower realizations in the lighting segment. However, cables and wires have shown steady margin expansion, benefiting from stronger brand equity and a focus on B2C sales.
Expected Recovery: ICICI Securities expects margin improvement from FY26 onward, driven by operating leverage from increased capacity utilization in cables and wires and resolution of plant relocation costs in switchgear.
Performance of Lloyd and the Consumer Durables Segment
Lloyd's Market Expansion: The brand has aggressively gained market share in air conditioners, outperforming peers.
Losses in FY20–FY24: High brand-building and trade spending have led to operating losses, but seasonal improvements suggest positive EBIT generation during summer quarters.
Break-Even Forecast: Lloyd is projected to achieve full-year break-even by FY27, though investments in refrigerators and washing machines could impact overall profitability.
Revenue Growth and Profitability Outlook
ICICI Securities forecasts a strong revenue and profit growth trajectory over the next three years:
| Metric | FY24 | FY25E | FY26E | FY27E |
|---|---|---|---|---|
| Net Revenue (Rs Mn) | 1,85,900 | 2,14,348 | 2,44,086 | 2,78,142 |
| EBITDA (Rs Mn) | 18,426 | 19,922 | 25,249 | 30,302 |
| EBITDA Margin (%) | 9.9 | 9.3 | 10.3 | 10.9 |
| Net Profit (Rs Mn) | 12,708 | 14,080 | 17,974 | 21,711 |
| EPS (Rs) | 20.3 | 22.5 | 28.7 | 34.6 |
Revenue CAGR of 14.4% from FY24–FY27: Driven by increased distribution reach and demand for premium products.
Net Profit CAGR of 19.5%: Margins are expected to expand with efficiency improvements and operational leverage.
Technical Analysis: Fibonacci Levels and Support & Resistance
1. Candlestick Patterns
Recent trading sessions indicate a Bearish Engulfing pattern, suggesting near-term weakness.
The Doji pattern observed earlier suggests indecision, meaning price movement will depend on volume trends.
2. Fibonacci Retracement Levels
Using Rs 1,413 (52-week low) and Rs 2,106 (52-week high) as reference points:
| Fibonacci Level | Price (Rs) |
|---|---|
| 23.6% | 1,720 |
| 38.2% | 1,850 |
| 50.0% | 1,950 |
| 61.8% | 2,020 |
| 76.4% | 2,080 |
Current price of Rs 1,521 is below the 23.6% Fibonacci level, indicating potential upside if it crosses Rs 1,720.
Support is strong at Rs 1,450, while resistance is near Rs 1,620.
3. Support and Resistance Levels
Immediate Support: Rs 1,500 – Holding this level is crucial to prevent a downside towards Rs 1,450.
Immediate Resistance: Rs 1,600 – A breakout here could trigger momentum towards Rs 1,720.
Competitive Landscape
Havells competes in the white goods and electrical appliances sector against key players:
Bajaj Electricals: A major competitor in lighting, electrical appliances, and consumer durables. The company has a strong distribution network but lacks Havells' premium positioning.
Voltas: A dominant player in air conditioning, competing with Lloyd. While Voltas leads in market share, Havells' aggressive pricing strategy could narrow the gap.
Investment Outlook and Conclusion
ICICI Securities maintains a positive outlook on Havells, citing strong revenue growth, improving margins, and premiumization trends. However, investors should consider near-term margin pressures and continued losses in the Lloyd business.
Key Takeaways:
✔️ BUY Rating Maintained – Target price Rs 1,800 (implying 18% upside).
✔️ Expect Margin Recovery – EBITDA margin to rise from 9.3% in FY25 to 10.9% in FY27.
✔️ Lloyd to Break Even by FY27 – If brand investments pay off, it could boost consolidated margins.
✔️ Technicals Indicate Strong Support – Holding Rs 1,500 is crucial for the stock to maintain momentum.
Investors with a long-term horizon can consider buying Havells, especially if the stock sustains above Rs 1,500 and shows strength above Rs 1,600.
