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Weak quarter as ECD and Lloyd continues to lag

Quick Pointers

* W&C reported volume growth of 6%

* Weak performance in cooling products due to delayed summer

Havells delivered moderate growth in Q4FY26, due to softness in the ECD and Lloyd segments, partly offset by healthy performance in the W&C segment (+14%). Wires witnessed flat growth due to channel inventory accumulation in Q3FY26, while cables posted strong growth led by power cables. In the ECD segment, Fans were impacted in Q4FY26 due to channel accumulation in Q3FY26 following changes in BEE norms, while other cooling categories were also impacted by the delayed summer season while the company has maintained its market share. In RAC segment, demand remained subdued from Mar’26 till first week of April; however, traction has improved across South and West, with channel inventories also expected to normalize gradually by end of Apr’26. The company has guided for ~INR8bn capex in FY27, largely towards the W&C segment, with strong demand visibility in wires. while a portion of the capex will be allocated towards R&D over the next 2-2.5 years. To offset RM inflation in the Lloyd segment amid global uncertainty the company plans to implement price hikes in the range of 8-15%. The company sees the solar portfolio as a key growth driver to support overall growth. We estimate revenue/EBITDA/PAT CAGR of 13.6% / 16.5% / 12.2% with ECD/Cables/Lloyd revenue CAGR of 12%/16%/14.4% over FY26-28E and EBITDA margin of 10.3% by FY28E. We downward revise our FY27/28 earnings estimates by 3.1%/0.9% driven by weak margins in Lloyd and slower growth in the ECD portfolio. We downgrade the stock to ‘ACCUMULATE’ from ‘BUY’ with a revised TP of INR1,505 (earlier INR1,512) based on DCF, implying 45x FY28E earnings.

Revenue grew by 2.5%, PAT grew by 39.6% YoY: Revenues grew by 2.5% YoY to INR67.1bn (PLe: INR73.4bn, Cons Est: INR72.1bn). Gross margins contracted by 70bps YoY to 31.4% (PLe: 30.1%). EBITDA declined by 4.1% YoY to INR7.3bn (PLe: INR7.4bn, Cons Est: INR6.7bn). EBITDA margin contracted by 70bps YoY to 10.8% (PLe: 10.0%, Cons Est: 9.3%). Advertising & sales promotion spends stood at 2.6% of sales. In terms of segmental EBIT margin, Cables came in at 14.2% (+230bps), Lighting at 21.3% (+490bps), ECD at 10.3% (-220bps), Switchgears at 23.2% (-250bps YoY), Lloyd at -1.8% in Q4FY26, and Other at 4.7% (+80bps). PBT declined by 7.1% YoY to INR6.5bn (PLe: INR6.8bn, Cons Est: INR6.5bn). PAT grew by 39.6% YoY to INR7.2bn (PLe: INR5.2bn, Cons Est: INR4.7bn), aided by a one-time gain of INR2.5bn from fair value gain on investment in Goldi Solar.

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