Havells India (HAVL IN) – Q1FY27 Result Update – Demand remains soft as margins contracts – ACCUMULATE

Havells reported 19.7% YoY revenue growth in Q1FY27, supported by resilient demand across categories despite raw material inflation and geopolitical uncertainties. Company revised its segment reporting by carving out Renewables as a separate segment, while reclassifying Solar, Solar Pumps and EVSE from Switchgears/Others and Water Purifier and Personal Grooming from Others to ECD, with comparative numbers restated. Cables delivered strong 27% YoY value growth, while volumes remained broadly flat due to raw material price volatility. ECD demand remained moderated despite calibrated price hikes. Lloyd recorded 15.7% YoY value growth, while RAC volumes grew in single digits. The company implemented calibrated price hikes averaging 7-8% to offset raw material inflation and expects elevated A&P spends (4.4% of revenue) in Q1FY27 to normalize over the rest of the year. Management has guided for ~INR14bn capex in FY27, including ~INR8bn towards Cables, ~INR2bn for a new R&D centre and the balance for other segments. Renewables delivered robust growth, supported by strong demand for solar panels, with management remaining positive on the long-term growth opportunity. We estimate revenue/EBITDA/PAT CAGR of 17.0% / 17.1% / 19.4% with ECD/Cables/Lloyd revenue CAGR of 12.2%/19.9%/15.1% over FY26-28E and EBITDA margin of 9.8% by FY28E. We downward revise our FY27/28 earnings estimates by 5.7%/0.9% factoring in higher A&P spends and raw material inflation. We maintain our ‘ACCUMULATE’ rating with a revised TP of INR1,319 (earlier INR1,328) based on DCF, implying 40x FY28E earnings.