Havells India shares rose 0.68% to ₹1,195.40 on Monday following the Q1FY27 results announcement, but analyst opinions remain divided on the stock's prospects. Anand Rathi maintains its Buy rating while lowering the target price to ₹1,379 from ₹1,447 earlier, expecting the earnings recovery to be gradual. However, Motilal Oswal has adopted a more cautious stance, recommending a Neutral rating with a target price of ₹1,220 based on 40x FY28E EPS. The brokerage notes that Havells India trades fairly at 48x/39x FY27E/FY28E EPS and expects the company to guide for capex of ₹14 billion for FY27. LKP Research has now joined the positive camp, recommending a Buy rating with a target price of ₹1,400 in its research report dated July 21, 2026, based on 42x FY28E EPS, citing the company's strategic shift to a sell-out led distribution model.
According to latest reports, Havells India Ltd delivered almost 20% year-on-year revenue growth to ₹6,518 crore in Q1FY27, but Ebitda margin declined 230 basis points to 7.2%. The margin pressure was primarily driven by the company's strategic decision to double advertising and sales promotion (A&P) expenses to ₹286 crore, representing a significant increase from the ₹600 crore spent in FY26. As per Bloomberg, the company has implemented staggered price hikes averaging 7-8% across segments to combat raw material inflation, with some categories seeing increases up to 20% due to higher copper and aluminium content. The company has now implemented price increases of 5-20% across categories to address commodity volatility. LKP Research acknowledges that the deliberate shift to a sell-out led distribution model may pinch primary sales for a quarter or two, but emphasizes it is healthy for the channel over the long run.
The latest quarterly results showed EBITDA declined ~10% YoY to ₹4.7 billion, falling ~24% below analyst estimates, while PAT declined ~17% YoY to ₹2.9 billion, missing estimates by ~29%. According to Motilal Oswal's research report dated July 17, 2026, operating margin contracted 2.3 percentage points YoY to 7.2% against the estimated 9.2%. The weak performance was attributed to higher A&P spending of 4.4% of revenue versus 2.6% in Q1FY26/Q4FY26, and higher raw material costs impacting profitability. Despite the challenging quarter, the company's diversified portfolio showed resilience with cables revenue rising 27% year-on-year to ₹2,455 crore and the newly carved-out renewables business surging 236% to ₹314 crore.
Management expects A&P spending to normalize to 2.7-2.8% of revenue for FY27, aligning with long-term averages, which should support earnings growth recovery. Nuvama Research anticipates strong double-digit revenue/Ebitda growth in Q2/Q3, albeit on a low base as the impact of distribution strategy transition abates. The company has allocated ₹800 crore of FY27's ₹1,400 crore capex toward cables expansion, with ₹200 crore earmarked for a new research and development centre. Motilal Oswal expects the company to guide for capex of ₹14 billion for FY27 and anticipates revenue and PAT to clock a CAGR of 13% and 8% respectively over FY26-FY28E. LKP Research maintains that the company's strategic investments in premium products and renewables segments, combined with the sell-out led distribution model, position it well for long-term growth despite near-term margin pressures.
Renewables, cables, and premium products continue to be identified as key growth drivers for FY27 expansion, with the company's strategic investments positioning it to capitalize on India's infrastructure development and energy transition trends. The focus on premium products and renewables segments aligns with the country's energy transition initiatives, while the company's diversification strategy across electrical solutions and renewable energy continues to show strong performance across multiple segments. The Q1FY27 results reflect this transition phase as the company builds toward its next growth phase despite current margin pressures from strategic brand investments. LKP Research emphasizes that the company's strategic shift to a sell-out led distribution model, while potentially impacting primary sales in the short term, is healthy for the channel over the long run and supports its positive outlook.
