Havells India gets bullish nod – LKP Research lifts target to Rs 1,400

Havells India Ltd (NSE: HAVL) found itself in the spotlight on July 21, 2026 after LKP Research released a fresh broker note. The firm slapped a “BUY” rating on the stock and nudged the price target up to ₹1,400 – a jump that, on paper, translates to about a 42‑times multiple on the projected FY28 earnings per share.

Why the optimism? The numbers from the company’s first‑quarter FY27 results are hard to ignore. Revenue climbed to ₹65.1 billion, a 19.7 % rise year‑on‑year. The jump was led by the cables‑and‑wires division, which posted a 27 % surge, and the renewables arm that exploded by a staggering 236 % YoY. Those growth stories, however, came with a few asterisks.

Despite the top‑line lift, profitability slipped. EBITDA fell to ₹4.7 billion – down 9.4 % – pushing the EBITDA margin to 7.3 %, roughly 230 basis points lower than the same quarter a year ago. Adjusted profit after tax also eased, slipping 15.9 % to ₹3.0 billion. Management pointed to two main culprits: a sharp rise in raw‑material costs and a near‑doubling of advertising spend, which rose to ₹2.9 billion (about 4.4 % of sales, up from 2.6 % a year earlier).

That extra ad spend, the note says, was a deliberate push to revive brand visibility after the company migrated to a “sell‑out” distribution model. In plain English, Havells is moving away from the traditional “sell‑in” system – where it sells to distributors – to a model where products are pushed directly into retail shelves. The transition may dent primary sales for a quarter or two, but LKP’s analysts reckon it will smooth the revenue stream in the longer run.

On the margin front, the management team is confident that the heavy‑weight advertising phase will taper off soon. They anticipate ad spend settling around 2.7 % of revenue for the full FY27, which should help margins bounce back. Moreover, recent price hikes of 7‑8 % have largely been passed on to customers, easing some of the cost‑inflation pressure.

Export dynamics also look a bit brighter. The switchgear segment, which had been hit by geopolitical tensions in West Asia, is expected to resume normal shipments, adding another layer of upside.

All of these pieces together form the backbone of LKP’s upgraded target. By projecting a more normalized margin profile and continued top‑line momentum, the research house lands on a ₹1,400 target – a figure that implies a 42‑times FY28 earnings multiple, a valuation that, while aggressive, reflects the firm’s belief in the company’s turnaround narrative.

Of course, the recommendation isn’t without caveats. The numbers are drawn from Havells’ own disclosures and the analysts’ internal estimates – there’s no independent audit of the forward‑looking assumptions. Raw‑material cost volatility, the success of the sell‑out model, and the pace of export recovery remain key risks that could swing the stock either way.

Investors looking for a blend of growth and a potential margin rebound may find the BUY call compelling, but a measured approach that watches the execution of the new distribution strategy and cost‑inflation trends would be prudent.