Havells India Ltd’s shares have recovered about 5% from their 52-week low of ₹1,250.10 apiece on 2 February. However, the stock is still about 6% down in the past two weeks since the West Asia conflict began. There are worries that rising costs could hurt profit margins of many companies, including Havells.
Harshit Kapadia, analyst at Elara Securities (India) said, “Rising prices of commodities (crude oil, copper, PVC), following the Iran-US-Israel tensions, will create margin stress for most companies and Havells is no exception. Post March quarter (Q4FY26) results, Havells could see downgrades in FY27 and FY28 earnings estimates.”
Raw material inflation remains a key headwind for the cables segment, which formed 39% of its total consolidated segment revenues in the nine months ended December (9MFY26). In a recent interaction with analysts from Motilal Oswal Financial Services, Havells’ management indicated that margins are expected to contract quarter-on-quarter as the company exhausts low-priced inventory procured in earlier quarters.
In Q3FY26, cables revenue grew by 33% year-on-year, driven by over 20% volume expansion and price hikes to cope with the commodity cost inflation. Cables Ebit (earnings before interest and tax) margin expanded 77 basis points (bps) year-on-year in Q3 to 11.8%, but dropped 190 bps versus Q2.
Within the segment, wires operate at around 65% capacity utilization, while cables run at more than 90% utilization. Havells’ two new upcoming cable plants in Rajasthan and Bengaluru would aid medium-voltage expansion and entry into higher-value HT (high-tension) categories.
Meanwhile, the Lloyd Consumer business, which includes room air-conditioners (RAC), remains a sore spot amid lingering demand weakness and elevated channel inventory, though inventories are now normalising. The segment reported an Ebit loss of ₹7.6 crore for 9MFY26 and 25% year-on-year drop in revenues. Recovery could be painfully slow.
“The onset of summer was delayed a bit this year and given high channel inventory, RAC sales growth could be adversely impacted even as the season looks set to be intense,” said Kapadia, adding that structural demand triggers for Havells’ products are missing in general. The company has taken 5-10% price hikes in RACs to offset currency impact, BEE rating revisions, and input cost inflation.
Among other segments, switchgears has been resilient this year, clocking 8.5% revenue growth during 9MFY26, while electrical consumer durables (ECD) revenue declined almost 4%.
Overall, Motilal Oswal expects Havells to report revenue and Ebitda CAGR of 14% and 22%, respectively, over FY26-28. “Demand trends in Havells’ key product segments are mixed. Infrastructure-linked B2B segments, such as cables and switchgear, have shown steady growth, while other consumer durables have faced seasonal weakness and inventory destocking,” said the broking firm’s report dated 4 March.
Against this backdrop, valuations don’t bring comfort. The stock trades at 42 times estimated earnings for FY27, as per Bloomberg consensus. From a near-term perspective, recovery in RAC sales and how the summer season pans out, are key variables to track.