Honeywell Automation India's shares surged 13% to hit a three-month high during Thursday's trading session, extending gains from the previous session's 18.55% rally. The stock was trading 36.4% above its 52-week low of ₹26,220 and nearly 8% above its 52-week high of ₹41,450, demonstrating strong momentum following the company's better-than-expected Q4FY26 performance. The post-results rally and JM Financial's upgrade to Buy with a ₹44,000 target could mark the beginning of a re-rating cycle for the stock, with the latest gains pushing it to the top of the Nifty 500 index.
The company reported strong quarterly results with consolidated net profit rising 14.2% year-on-year to ₹160 crore in Q4FY26, compared to ₹139.90 crore in the same period last year. Revenue from operations increased 5.9% year-over-year to ₹1,180.7 crore from ₹1,114.5 crore in the corresponding quarter of the previous year. At the operating level, EBITDA rose 15.2% year-on-year to ₹184.8 crore from ₹159.8 crore, while EBITDA margins expanded significantly to 15.6% from 14.3% in Q4FY25. The standout feature was the 130 basis points year-on-year margin expansion and 300 basis points sequential improvement from Q3FY26's 12.63% margin, reflecting strong operating leverage and cost discipline.
For the full FY26, the company reported revenue of ₹4,681.90 crore, up 11.7% from ₹4,189.60 crore in FY25, though full year PAT remained nearly flat at ₹525 crore versus ₹523.60 crore in FY25. The company also announced a final dividend of ₹110 per equity share for the financial year ended March 31, 2026, equivalent to 1,100% of the face value. This translates to a dividend yield of approximately 0.36% at the previous close of ₹30,172.35, reinforcing the company's strong cash generation capabilities and management confidence in future cash flow generation.
JM Financial upgraded its rating to 'Buy' and set a target price of ₹44,000, indicating a potential upside of 45.8% from the previous close of ₹30,172.35. The brokerage valued the stock at 34 times FY28 estimated EPS, noting it trades at the lowest valuation among automation peers. JM Financial believes margins have turned the corner based on the Q4FY26 results, with quarterly EPS of over ₹180 providing visibility for FY27E EPS of more than ₹750, implying an 11% rise in earnings. However, Antique Stock Broking maintained its Hold rating with a revised target price of ₹34,369, valuing the company at 45 times FY28 estimated EPS and expecting a 13% revenue CAGR over FY26-FY28 with EBITDA margin improving to 13% by FY28.
The Honeywell Automation Q4FY26 results mark a potential inflection point with EBITDA margin expanding to 15.6% - the highest in recent quarters. Key growth drivers for FY27 include the expansion of Honeywell's building automation solutions business, which recently signed a partnership with the NHL for building automation, increased adoption of Honeywell's process control solutions in India's refining and petrochemicals sector, and the continued digitisation of India's manufacturing base. The parent company Honeywell International's planned corporate restructuring, with potential spin-offs, could create strategic optionality for the India subsidiary. India's industrial automation sector is expected to grow at 12-15% annually, driven by manufacturing PLI schemes, smart city initiatives, and Industry 4.0 adoption, positioning Honeywell well to capture this structural growth.
