HAVELLS - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 3.7

📊 Financial Overview: Havells India demonstrates strong operational efficiency with a ROCE of 25.6% and ROE of 19%, supported by a low debt-to-equity ratio of 0.03. The company’s quarterly PAT of ₹317 Cr, though lower than the previous ₹352 Cr, still reflects a healthy YoY growth of 16.5%. However, the P/E ratio of 63.5 and PEG ratio of 8.07 indicate significant overvaluation compared to the industry average P/E of 26.6.

💼 Business Model & Competitive Edge: Havells operates in the fast-moving electrical goods (FMEG) sector with a diversified portfolio including switchgears, cables, lighting, and consumer appliances. Its strong brand equity, extensive distribution network, and strategic expansions—like the new cable facility in Rajasthan—enhance its competitive positioning and long-term scalability.

📉 Valuation & Entry Zone: The stock appears overvalued based on its high P/E and PEG ratios. Technical indicators such as MACD (-8.89) and RSI (50.8) suggest neutral to weak momentum. A potential entry zone lies near the support range of ₹1,360–₹1,400, especially if volume strengthens and MACD shows bullish crossover.

📈 Long-Term Holding Guidance: Havells remains a solid long-term hold due to its strong fundamentals, low leverage, and strategic growth initiatives. Investors should monitor seasonal demand recovery and margin trends in key segments like Lloyd and ECD.

✅ Positive

• High ROCE and ROE reflect strong capital efficiency
• Minimal debt enhances financial flexibility
• Strategic expansion in cables segment supports future growth
• Strong brand and wide distribution network

⚠️ Limitation

• Valuation metrics (P/E and PEG) suggest overpricing
• Quarterly profit decline and weak seasonal demand in key segments
• MACD and RSI indicate lack of bullish momentum

📉 Company Negative News

• QoQ decline in PAT from ₹352 Cr to ₹317 Cr
• Weak performance in Lloyd and ECD segments due to seasonal factors
• Reduction in FII holdings by 2.31%

📈 Company Positive News

• YoY PAT growth of 16.5% despite seasonal headwinds
• Growth in cables & wires and switchgear segments offset segmental weakness
• Positive outlook from brokerages with long-term buy ratings

🏭 Industry

• FMEG sector benefits from rising urbanization and infrastructure development
• Festive season and GST reforms expected to boost consumer demand
• Industry P/E of 26.6 highlights Havells' premium valuation

🧾 Conclusion

Havells India is fundamentally sound with strong return metrics and low debt. However, its current valuation is stretched, and short-term performance is mixed. Long-term investors may consider accumulating near ₹1,360–₹1,400 levels, with a focus on margin recovery and seasonal demand trends.

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