Havells India’s margin recovery hinges on easing A&P spends, price hikes after weak Q1
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Havells India Ltd reported a 20% year-on-year revenue growth in Q1FY27, reaching ₹6,518 crore, but faced a decline in Ebitda margin to 7.2% due to increased advertising expenses. Despite some downgrades in earnings estimates, the company expects strong double-digit growth in the upcoming quarters, supported by price hikes and a focus on brand-building. However, ongoing margin pressures and competition remain concerns for investors.
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Havells India Ltd’s almost 20% year-on-year revenue growth in the June quarter (Q1FY27) to ₹6,518 crore is satisfactory, but Ebitda margin was a sore spot, declining 230 basis points to 7.2%.
The company stepped up and frontloaded brand-building efforts, leading to the doubling of advertising and sales promotion (A&P) expenses to ₹286 crore, hurting profitability. For perspective, A&P expenses stood at around ₹600 crore in FY26.
The management expects A&P spending to normalize ahead and be around 2.7%-2.8% of revenue for FY27, in keeping with its long-term average. This, along with staggered price hikes that Havells has implemented across segments to fight raw material inflation, should support earnings growth.
Nuvama Research expects Havells to post strong double-digit revenue/Ebitda growth in Q2/Q3, albeit on a low base as the impact of distribution strategy transition abates. Ebitda is short for earnings before interest, taxes, depreciation and amortization.
While Nuvama has broadly maintained earnings estimates post Q1FY27, some have downgraded. For instance, Motilal Oswal Financial Services has cut its Ebitda estimates for FY27 and FY28 by about 6% and 8%, which has led to an earnings per share reduction of about 8% and 10%, respectively.
Within Havells’ segments, Q1FY27 cables revenue rose 27% on-year, led by pricing to ₹2,455 crore. The newly carved-out renewables business revenue surged 236% to ₹314 crore on a low base, aided by demand for solar products. Lighting and fixtures grew 4.5% to ₹390 crore. On the other hand, switchgear revenue fell by 4% as exports were disrupted by the war in West Asia.
Lloyd grew 15% but stayed loss-making given the delayed onset of summer, channel inventory normalization and higher A&P spend.
Havells’ product price hikes have averaged 7%-8%, while some categories with higher copper and aluminium content saw steeper increases of up to 20%.
The company is expanding beyond solar modules in the renewables segment. Recently, Havells partnered with Norway-based Pixii AS to develop battery energy storage systems for India.
Meanwhile, around ₹800 crore of FY27’s slated capex of ₹1,400 crore would be towards cables. Another ₹200 crore will be spent on a new research and development centre, and the rest will be deployed across other businesses.
Havells shares are down about 16% so far in 2026 and trade at 43 times estimated FY27 earnings, as per Bloomberg. Margin pressure, stiff competition, raw material volatility, and Lloyd’s sluggish performance have weighed on sentiments for the stock.
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