Havells India: Amid gloomy weather, cables come to the rescue

Despite muted sentiment in the broader consumer durables space due to a delayed monsoon and subdued demand for cooling products, Havells India has managed to surprise the Street—thanks to the robust performance of its cables and wires segment. While weather-related challenges impacted key verticals like fans and air conditioners, strong infrastructure-led demand for cables turned out to be a silver lining.

Mixed Q1 Performance: Consumer Division Falters, Cables Shine

In its Q1 FY26 results announced last week, Havells India reported a 5.5% year-on-year rise in revenue, reaching ₹4,437 crore. However, net profit dropped by 2.4% YoY to ₹287 crore, reflecting the pressure in its consumer-facing categories.

The company's flagship electrical consumer durables (ECD) business, which includes fans, water heaters, and appliances, witnessed low-single-digit growth. Unseasonal rainfall and extended cool weather in North and Central India dented the uptake of summer-centric products, especially in April and May.

In stark contrast, the cables segment posted 18% YoY growth, emerging as the star performer. This division, which contributes over 40% to Havells' topline, benefited from a surge in demand from real estate, industrial capex, and infrastructure projects across Tier I and Tier II cities.

Analyst View: ‘Strong Moat in B2B Cable Play’

Market analysts believe Havells' diversified portfolio played a critical role in cushioning the impact of weather disruptions.

“Havells has successfully de-risked its revenue model over the years. While ECD remains seasonal and retail-driven, the B2B cables and switchgear businesses are less volatile and offer higher predictability,” said Vivek Sharma, Consumer Durables Analyst at ICICI Securities.

He added that the company’s aggressive channel expansion and continued investments in R&D are likely to keep its B2B offerings competitive, especially in the premium and institutional categories.

Margins Under Pressure, But Not Alarming

Gross margin in Q1 declined marginally to 27.5% from 28.1% in the year-ago quarter, largely due to commodity price fluctuations and weak volumes in air conditioners and small appliances. However, EBITDA margin stayed resilient at 11.8%, supported by scale efficiencies in the cable business.

“We expect margin pressures to ease in the second half as festive season demand picks up and commodity prices stabilize,” said Sakshi Bansal, Equity Research Associate at Motilal Oswal.

Lloyd Struggles Again Amid Price Wars

Havells' consumer electronics arm, Lloyd, continued to underperform with a 5% YoY decline in revenues. The segment faced stiff competition from Korean and Chinese players offering deep discounts on air conditioners.

Management acknowledged the challenge but remained optimistic.

“Despite external headwinds, we’re seeing improvement in Lloyd’s backend operations. We expect better traction from Q2 onwards as inventory levels normalize,” said Anil Rai Gupta, CMD, Havells India, during the post-earnings call.

Stock Market Reaction and Valuation Outlook

Post earnings, Havells shares rose 3.4% to ₹1,610 on the NSE, reflecting investor confidence in the company’s ability to manage macro headwinds. The stock is currently trading at ~55x FY26E EPS, which analysts say is slightly elevated but justified given the company’s consistent growth and brand strength.

Brokerages remain largely positive. Jefferies retained its ‘Buy’ rating with a target price of ₹1,720, while Axis Capital upgraded the stock to ‘Add’, citing potential market share gains in the cable and switchgear business.

What Lies Ahead: Monsoon Recovery, Infra Push Key Catalysts

Looking ahead, the company’s performance will hinge on two key factors—monsoon revival and government-led infrastructure push. With rainfall activity picking up in late July, demand for fans, pumps, and electrical fittings is likely to bounce back.

The government’s emphasis on housing and electrification projects under schemes like PM Awas Yojana and Smart Cities Mission will further bolster cable demand.

“We’re cautiously optimistic. Havells is positioned well to benefit from India’s infrastructure and electrification cycles, but volume recovery in consumer durables will remain key to sustainable margin expansion,” said Ramesh Tiwari, Fund Manager, HDFC Mutual Fund.

Investor Outlook: Balanced Approach Needed

While the short-term demand outlook for consumer durables remains uncertain, the resilience of the cables segment and improving fundamentals of the B2B portfolio make Havells a compelling long-term story.

Investors should track Lloyd’s turnaround efforts, margin trajectory, and festive season performance closely. Those with a medium to long-term horizon may consider accumulating the stock on dips.