ICICI Sec trims Havells target on near-term softness, but retains 'Buy'

ICICI Sec has trimmed its target price to ₹1,725, but has retained 'Buy' rating as it sees an attractive entry point for long-term investors post recent 20 per cent stock correction over 12 months

ICICI Securities remains positive on Havells India despite flagging a soft near-term outlook driven by weak demand for air conditioners (RAC) and the upcoming change in energy efficiency norms. The brokerage has trimmed its target price to ₹1,725 (from ₹1,775), implying about 46 times FY28E earnings per share (EPS), but has retained ‘Buy’ rating as it sees an attractive entry point for long-term investors post recent 20 per cent stock correction over 12 months.

Short-term soft patch

ICICI Securities expects the next couple of quarters to remain subdued due to elevated year-on-year (Y-o-Y) RAC inventory despite post-festive season declines, likely weak secondary sales in RAC and fans in Q3FY26, and potential disruptions from Bureau of Energy Efficiency (BEE) norm changes in January 2026. While these factors may create short-term headwinds, the brokerage believes the current inventory position is manageable and will normalise with demand stabilisation.

 

Price hikes to protect margins, offset GST and cost pressures

Analysts believe that the price hike in air conditioners would be in line with the goods and services tax (GST)-led reductions. This would be driven by an 5 per cent increase due to BEE rating changes, 2-3 per cent raw material inflation, 1–2 per cent INR depreciation and 1–2 per cent from higher e-waste costs. 

 

ICICI Securities sees similar pricing actions are likely across the industry. These price hikes are necessary to sustain margins, according to the brokerage. However, price hikes may be done in 2-3 tranches.

Solar, energy transition and innovation emerging as growth engines

ICICI Securities models Havells to generate ₹400 crore revenue from solar panels, inverters and ancillaries in FY26 and is targeting ₹1,000 from the solar business by FY27E. This would be driven by industry tailwinds, deep distribution network and stable pricing. 

 

Acquisition of a stake in Goldi is likely to result in a steady supply. The brokerage believes providing a branded full-stack offering, including AMC and warranties, supports superior margins. Havells would focus on residential, commercial and industrial segments while avoiding government projects.

 

ICICI Securities identifies medium- to long-term growth drivers in Havells’ focus on energy transition products like electric vehicles (EV) chargers and battery storage, and significant reserach and developemnt (R&D) investments in a new Noida centre for product innovation. These initiatives, coupled with efforts to strengthen distribution, are expected to provide long-term revenue visibility and diversify the product portfolio.

E-waste rules add margin pressure, but Havells better placed than peers

A sharp increase in mandatory e-waste recycling costs is creating temporary margin pressure through higher provisions. However, ICICI Securities believes Havells is better positioned than most competitors to absorb or pass on these costs over time, noting that the impact is currently on earnings rather than immediate cash outflow.

 

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