The temperature is rising and the focus is now on AC stocks to not just beat the heat but also add to your portfolio. Motilal Oswal maintained its ‘Neutral’ rating on the stock with a target price of Rs 1,650 as it remains positive on growth prospects in the core segment. Plus, the growth for Lloyd through sustained operating leverage.
Motilal Oswal on Havells: Lloyd brand game
The company is strengthening its position in the residential air conditioning (RAC) market through its brand Lloyd. It aims on split ACs and operational efficiency. Lloyd has gained market share in RACs over the last few years and is now ranked among the top three players in the industry.
As of now, Lloyd’s 75% of Lloyd’s revenue comes from RACs (80% split and 20% windows), while the remaining comes from washing machines (mostly semi-automatic), refrigerators, and televisions. Lloyd has been focused on strengthening its brand through channel expansion, innovative product offerings, and investments in manufacturing and customer outreach.
Over the past 4 financial years, the capex for Lloyd stood at Rs 7,700 crore, accounting for 36% of the company’s total capex during this period.
Havells’ expansion plan
The company aims to further expand RAC’s manufacturing capacity to 30 lakh units by Q4 FY25 with a capex of Rs 50-60 crore. Also, it is setting up a refrigerator manufacturing capacity of 14 lakh units in Rajasthan. The project is expected to be completed by September 2026, with a total capex of Rs 4,800 crore. The company is also investing in modern format retail and quick commerce channels, with e-commerce and MFR collectively contributing 40% to Lloyd’s revenues.
Havells continues to strengthen its distribution network by expanding into modern trade channels like Croma, Reliance Digital, and Vijay Sales (a plausible new entry based on its modern trade focus), along with regional chains.
Havells plans to increase lighting business
The lighting business is divided into consumer lighting and professional lighting, with a strategic focus on premiumization, innovation, and efficiency to counter LED price erosion, which is a persistent industry challenge. The company has seen robust volume growth of 15% despite modest price declines, shifting its portfolio toward value-added products. While the industry mix is 60% bulbs and batons and 40% value-added items, Havells has reduced its bulb reliance to
40%.
» Read More
