HAVELLS

Q1FY27: High Ad Spend and Cost Pressures Weigh on Margins

registered a strong ~20% YoY revenue growth in Q1FY27, reaching ₹6,518 crore. However, EBITDA margins contracted by 230 basis points to 7.2%, driven by aggressive frontloaded brand investments. Doubled Promotional Expenses: Advertising and sales promotion (A&P) expenses soared to ₹286 crore in Q1—nearly half of the total FY26 A&P outlay—severely impacting quarterly profitability. Management expects A&P spending to normalize to 2.7%–2.8% of revenue over FY27. Price Hikes to Offset Inflation: To combat elevated raw material costs (especially copper and aluminum), Havells implemented price increases averaging 7%–8%, with select product categories seeing hikes up to 20%. Segmental Performance: The newly carved-out renewables segment surged 236% YoY to ₹314 crore, and cable revenues grew 27% to ₹2,455 crore. Conversely, switchgear revenue dropped 4% due to West Asia export disruptions, while Lloyd remained loss-making. Expansion and Capex Plans: Capital expenditure for FY27 is set at ₹1,400 crore, with ₹800 crore allocated to cables expansion and ₹200 crore dedicated to a new R&D facility. The company also partnered with Norway-based Pixii AS to expand into battery energy storage systems. Market Sentiment & Earnings Outlook: Driven by margin headwinds and macroeconomic cost pressures, analysts from firms like Motilal Oswal cut FY27/FY28 earnings estimates by 8%–10%. The stock trades around 43 times estimated FY27 earnings, having fallen ~16% in 2026.