On Friday, Investec revised its share price target for Havells India (HAVL:IN), reducing it to INR 1,850 from the previous INR 1,910, while keeping a Hold rating on the stock. The adjustment follows Havells India's second-quarter earnings, which presented a mixed financial picture.
The company's Q2 EBITDA saw a modest year-over-year increase of 2%, but this fell short of both Investec's and the consensus estimates by 16-17%. The shortfall was attributed to a significant decrease in EBITDA margin, which was down by 1.2 percentage points year-over-year, based on a comparison with a weak previous year.
This margin erosion was linked to several factors: an unfavorable product mix with weaker Switchgear revenues and stronger Cables revenues, raw material cost impacts within the Cables segment, and a marked rise in employee and operating expenses.
Despite these challenges, Havells India's revenue growth for the quarter was aligned with expectations, showing a 16% year-over-year increase. This growth was primarily driven by the Cables segment. However, due to the lower-than-expected margin performance, Investec has adjusted its margin expectations for the fiscal years 2025 to 2027, leading to a 3-5% reduction in the firm's earnings per share (EPS) estimates for Havells India.
The maintained Hold rating indicates that Investec does not currently recommend increasing investment in Havells India's shares, despite the revised price target suggesting a slight decrease in the expected stock value.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.