- Wire & Cables (W&C) revenue exploded 32.8% YoY, outpacing peers.
- Capacity utilization now 90‑100% for cables, signalling tight supply.
- Potential 5‑10% price hike in RAC units could lift margins before GST offset.
- FY27 capex plan of Rs10 bn focuses on R&D and W&C expansion, hinting at long‑term growth.
- DCF‑based target price of Rs1,634 implies a 48x FY28E earnings multiple – a premium that must be justified.
You missed Havells' wiring boom, and your portfolio paid the price.
Havells' Q3FY26 Performance: Numbers That Matter
In the third quarter of FY26 Havells India delivered moderate top‑line growth, but the real story lies in the Wire & Cables (W&C) segment, which surged 32.8% year‑on‑year. The growth was propelled by a combination of higher cable volumes and a rebound in lighting products, where the company appears to have nudged market share upward.
Meanwhile, the Electrical Consumer Durables (ECD) arm posted a mixed picture. Heating products benefitted from an unusually cold winter, while cooling‑related inventory (RACs and fans) is on a clear‑out trajectory, expected to normalize by May 2026. Management hinted at a 5‑10% price increase for RACs in Q4FY26; the uplift would be partially neutralized by a GST‑related price reduction, leaving net margin upside.
Capacity utilization metrics paint a vivid contrast: wires are running at 65‑70% of capacity, whereas cables are at a near‑full 90‑100% level. This disparity suggests that the cable business is hitting a demand ceiling, which could force the firm to expand capacity or raise prices.
Why Havells' Margin Outlook Matches Wider Industry Trends
The Indian consumer‑durable sector is currently riding two macro forces: a government‑driven push for electrification and a surge in residential construction. Both trends fuel demand for wiring and cabling solutions. Havells, with its integrated W&C portfolio, stands to capture a larger slice of this expanding pie.
Historically, companies that double‑down on R&D in the wiring space have enjoyed superior margin expansion. For instance, when Philips expanded its lighting R&D hub in 2018, EBITDA margins rose 150 basis points within two years. Havells' FY27 capex of Rs10 bn, earmarked for a new R&D centre, mirrors that strategic play.
Competitor Landscape: How Tata and Adani Are Responding
Tata Power’s subsidiary, Tata Power Solar, has recently launched a high‑efficiency cable line aimed at renewable‑energy installations, but its volume remains modest compared to Havells’ 90‑100% utilization rate. Adani’s recent acquisition of a cable‑manufacturing unit signals intent to enter the W&C segment, yet integration risks and capital intensity could delay meaningful market impact.
By contrast, Havells maintains a diversified product mix—spanning lighting, fans, RACs, and wiring—that cushions it against cyclicality in any single sub‑segment. This diversification is reflected in its stable share‑of‑wallet across key categories, a competitive moat that many pure‑play cable firms lack.
Historical Context: What Past Wiring Booms Teach Us
During FY2014‑16, India’s wiring market experienced a 20% CAGR driven by the Smart Cities Mission. Companies that reinvested earnings into capacity and technology (e.g., Finolex) outperformed peers, delivering an average 15% EBITDA margin lift. Havells is now at a similar inflection point, with capacity utilization already near full for cables and a clear roadmap for expansion.
Key Financial Definitions (Quick Primer)
- EBITDA: Earnings before interest, taxes, depreciation, and amortisation— a proxy for operating cash flow.
- CAPEX: Capital expenditure, money spent on long‑term assets like factories and R&D centres.
- GST: Goods and Services Tax; a national consumption tax that can affect pricing dynamics.
- DCF: Discounted cash‑flow valuation, which projects future cash flows and discounts them back to present value.
Impact of Havells' Outlook on Your Portfolio
The firm projects revenue, EBITDA, and PAT compound annual growth rates (CAGR) of 11.9%, 12.7%, and 13.2% respectively through FY28E. Segment‑level forecasts show an 8.4% CAGR for ECD, an 18.6% CAGR for cables, and a 5.3% CAGR for the Lloyd brand. EBITDA margin is expected to reach 10.0% by FY28E, a modest 20‑basis‑point improvement over today’s level.
At a target price of Rs1,634, the implied FY28E earnings multiple is 48x—far above the sector average of roughly 30x. This premium is justified only if the anticipated capacity expansion, pricing power, and R&D outcomes materialise.
Investor Playbook: Bull vs. Bear Cases
Bull Case: Full utilization of cable capacity forces a price premium; successful R&D yields higher‑margin lighting and smart‑home solutions; export initiatives materialise, adding a 2‑3% revenue tailwind; margin expands to 10.5% by FY28E, pushing the stock toward a 55x earnings multiple.
Bear Case: GST‑related price cuts erode the RAC price‑increase benefit; inventory clearance takes longer, pressuring working capital; capex overruns delay R&D payoff; margin stalls at 9.5%, keeping valuation near 40x and limiting upside.
Given the current data, the author maintains an “ACCUMULATE” stance, believing the upside probability outweighs the risks, but advises investors to monitor inventory levels and the execution of FY27 capex.