Apr'25 View on Havells India Ltd

Havells India Limited is a leading Fast Moving Electrical Goods (FMEG) Company and a major power distribution equipment manufacturer with a strong global presence. It enjoys enviable market dominance across a wide spectrum of products, including Industrial & Domestic Circuit Protection Devices, Cables & Wires, Motors, Fans, Modular Switches, Home Appliances, Air Conditioners, Electric Water Heaters, Power Capacitors, Luminaires for Domestic, Commercial and Industrial Applications. Update following Q3 results • Q3FY25: Decent revenue growth in Electrical Consumer Durable (ECD)/Lloyd but weak prints in wires (growth) and ECD/switchgears (margin). • Management: Q3 margin headwinds transitory expected to normalize going forward. • Restocking in wires/positive channel sentiment for ACs/fans to aid near-term growth. • We lower revenue/EBITDA forecasts by 1-3%, leading to a 3-4% EPS cut. • We expect earnings per share (EPS) to grow by 20.5% in FY26E & by 22.3% in FY27E. • Our DCF-based fair value of Rs1,450, implies a PE of 42x Mar 2027E EPS. Positives: • Switchgears revenues grew 10.8% yoy in Q3FY25 (2.6% above our estimate). • Lloyd registered value growth of 14.7% yoy in a seasonally weak quarter. • Lighting EBIT margins was (+80/190 bps yoy/qoq) 14.8% (our estimate was 13.3%). Negatives: • EBITDA margin at 8.8% (down 100 bps yoy) missed our estimate of 9.5%. • Cables and wires revenue grew 7.3% yoy; 5.4% below our estimate. • Switchgears: contribution/EBIT margins down 370/572 bps yoy to 36%/18.2%; contribution margin usual band is 38-41%.