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We downward revise Havells India’s (HAVL) FY26/FY27E earnings by 2.0%/2.6% to factor in the soft margins commentary related Cable & Lloyd businesses and downgrade our recommendation to ‘HOLD’ from ‘BUY’, in view of the significant run-up in stock price in the near past. Havells reported strong results, primarily driven by robust growth in the Cables and Lloyd segments, though future momentum appears cautious. RAC segment expected limited growth due to delayed summer, high primary sales in Q4FY25, and slowdown in secondary sales in Q1FY26 so far. W&C segment delivered strong 21.2% revenue growth, with a balanced 50:50 mix of volume and value growth with wires contributing 65% to the segment. The company has made a strategic investment in the solar sector through Goldi Solar, with a focus on residential and commercial sectors and not into utility business. We estimate revenue/EBITDA/PAT CAGR of 14.8% / 20.2% / 20.4% with ECD/Cables/Lloyd revenue CAGR of 14.0%/17.0%/15.6% over FY25-27E and EBITDA margin of 10.7% by FY27E (+90bps). Downgrade to ‘HOLD’, with TP of Rs1,717 (earlier Rs1,750), based on DCF, which implies 50x FY27E earnings.

Revenue grew 20.2%, PAT declined 15.7% YoY: Revenue grew by 20.2% YoY to Rs65.4bn (PLe: Rs62.4bn). ECD (contributed 15% to revenue) grew 9.5% YoY with a mild start to the summer season. Lloyd revenue grew 39.2% YoY to Rs18.7bn, with a steady growth in RAC due to delayed summers. W&C revenue grew by 21.2% YoY to Rs21.7bn, led by power cables. EBITDA grew by 19.3% YoY to Rs7.6bn (PLe: Rs6.5bn). EBITDA margin contracted by 10bps YoY to 11.6%. (PLe: 10.4%). Advertising & sales promotion spends stood at 2.2% of sales (up 8.2% YoY) and employee expenses jumped 12.9% YoY. In terms of segmental EBIT margin, Cables came in at 11.9% (-10bps), Lighting at 16.4% (-160bps YoY), ECD at 12.5% (+130bps), Switchgear at 25.7% (-250bps YoY), and Lloyd at 6.1% (+340bps). PBT grew by 17.0% YoY to Rs7.0bn. PAT grew 15.7% YoY to Rs9.5bn (PLe: Rs4.5bn).

ConCall Takeaways: 1) HAVL has guided Switchgear’s contribution margin to range from 38% to 40%. 2) The company has overall capex plans of Rs10bn for FY25 and FY26 each, which includes a new R&D center. 3) No capex has been allocated to Lloyd for a couple of years. Tumkur plant expansion is underway. 4) W&C reported strong 21.2% revenue growth, driven equally by volume and value, with Wires contributing 65% to the segment. 5) Havells has strategically entered into solar business through investment in Goldi Solar. It plans to scale into residential and commercial segments. 6) RAC segment experienced muted growth due to a delayed summer, strong primary sales in Q4FY25, and slowdown in secondary sales, all of which affected primary sales volume. 7) The company has gained market share in residential switchgear, which makes up 75% of the business, while industrial switchgear saw slower growth and market share decline post-elections. 8) With the entry of 2 major players in the W&C industry, Havells’ investments will remain focused on expanding its reach, strengthening brand building, and advancing technology and product development. 9) The company is expanding into developed markets like the US, Europe and Australia, with exports contributing 3-3.5% of revenue.

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