Core areas light up Havells India as consumer durables dim the spark

Analysts see margins reviving as demand powers up in festival quarter

The July–September quarter (Q2) performance of consumer electricals and durables major Havells India in 2025-26 (FY26) was broadly in line with Street estimates. While the top line was supported by robust growth in the wire and cable, switchgear, and lighting segments, the consumer durables segment restricted overall gains. Although brokerages have trimmed their earnings estimates after the Q2 results, they remain positive on the outlook and expect a stronger second half (H2) of FY26. 

The company posted a 5 per cent rise in revenue, led by the wire and cable segment, which reported steady growth of 12.4 per cent in Q2FY26, driven by strong demand for power cables. Switchgear grew 8 per cent, while lighting rose 7 per cent, both contributing to the top line. While raw material costs increased in the wire and cable business, effective inventory management helped support margins. 

A key positive in this segment, according to analysts Shalin Choksy and Jignesh Thakur of JM Financial, was the 510 basis points (bps) year-on-year (Y-o-Y) and 110 bps quarter-on-quarter (Q-o-Q) improvement in earnings before interest and tax margins to 13.7 per cent, alongside a 540 bps Y-o-Y and 170 bps Q-o-Q improvement in contribution margins to 17.7 per cent, aided by elevated copper prices. The company continues to target a 15-16 per cent contribution margin on a normalised basis for this segment. 

Prabhudas Lilladher expects the growth momentum in the solar portfolio and the wire and cable segment to strengthen, supported by recent capacity expansions. Analysts Praveen Sahay and Shivam Patel of the brokerage believe that contribution margins — currently impacted by underutilisation, high fixed overheads, and elevated inventory levels — are likely to stabilise and improve in the coming quarters. 

The consumer durables segment (Lloyd) remained under pressure. Lloyd’s revenue declined 18.2 per cent Y-o-Y in Q2FY26 as elevated channel inventory and a weak season weighed on performance. The company introduced customer support schemes to assist dealers, which dented margins. Following the recent goods and services tax reduction, these schemes have been withdrawn, and inventory levels are expected to normalise by the end of the third quarter. 

The durables segment as a whole saw a 2 per cent Y-o-Y decline due to a mid-single-digit drop in fans and a sharp fall in air coolers. Strong growth in water heaters and small domestic appliances partly offset the decline. Margins were lower owing to under-absorption of manufacturing overheads at fan plants during the off-season and higher extended producer responsibility liabilities incurred during the quarter. The company expects these margin pressures to be temporary and anticipates improvement as revenue growth resumes.

 

Yes Securities maintains an ‘add’ rating, observing that high channel inventory is being liquidated and normalcy should return from the fourth quarter onwards. Analyst Aakash Fadia expects demand to bounce back, supported by improved real estate absorption and positive festival season sentiment. The brokerage continues to value the company at 50x, viewing the margin deterioration as temporary and likely to reverse with stronger demand.

 

Nirmal Bang, which has a ‘buy’ rating, expects H2FY26 to be robust — driven by business-to-business growth, international opportunities, and margin improvement through cost efficiency and premiumisation. The brokerage values Havells at 50x September 2027 earnings, believing the multiple is fair and reflects a projected 22.5 per cent earnings per share growth over 2024-25 through 2027-28 and an after-tax return on capital employed of 20.4 per cent in 2026-27.