Havells India 26% Kundan Solar deal to cut power cost

Deal snapshot: minority stake in a Rajasthan solar SPV

Havells India has approved the acquisition of a 26% stake in Kundan Solar (Pali) Pvt Ltd. The entity is a special purpose vehicle developing a 15 MWac solar power plant in Rajasthan. The company linked the move to its strategy of reducing reliance on fossil fuels and lowering power costs. The announcement places renewable sourcing alongside the company’s usual operating levers such as product mix, pricing, and efficiency. It also comes at a time when analysts are tracking working capital, margins, and demand conditions across Havells’ key divisions.

Why Havells is focusing on power sourcing and cost control

For an electrical consumer goods manufacturer, electricity is a direct input into factory operations and a contributor to operating costs. Havells’ decision to take a minority stake suggests a structured approach to securing a portion of supply rather than relying entirely on grid power. The stated objective is to reduce dependence on fossil fuels while lowering costs in Rajasthan. Because the investment is in a project SPV, the intent appears linked to a specific plant and its output rather than a broad platform acquisition. No financial outlay, valuation, or commissioning timeline was provided in the supplied information.

Quarterly performance: Q2 FY26 profit growth

On the results front, Havells India reported an 18.86% increase in consolidated net profit to Rs 318.28 crore in the September quarter of FY2025-26. The profit figure provides near-term context as the company balances cost actions with uneven demand in certain categories. Profit performance is being tracked closely given competitive intensity and promotional activity in some product lines. The reported number also sits alongside mixed signals across other quarters and segments mentioned in the broader set of notes.

Q1 FY26: profit decline and revenue miss highlighted

Havells India also reported a 14.72% year-on-year decline in consolidated profit after tax to Rs 347.53 crore in Q1 FY26. In addition, Havells’ 1QFY26 revenue was reported to have declined about 6% year-on-year to INR 54.6 billion, which equals Rs 5,460 crore. The same note described this as roughly a 7% miss, driven by lower-than-expected growth in Lloyd, ECD, and lighting. These data points frame why management commentary on recovery, inventory, and margin normalisation has remained important for investors.

Segment cues: cables demand strong, but margins watched

Multiple snippets pointed to strong demand in cables and wires, including robust demand for power cables and positive signals from real estate and construction as a volume driver. At the same time, near-term margin pressure in cables and wires was flagged. Capacity constraints were also mentioned as a factor behind lower cables growth in one observation. Separately, the company was noted to have secured a 39-acre plot aimed at increasing production capacity, signalling a possible longer-term expansion path.

Lloyd and summer categories: inventory and promotions weigh

The Lloyd division was described as facing inventory normalisation, with demand recovery awaited. Commentary also flagged a revenue drop in summer products such as air conditioners, fans, and coolers due to a shorter summer season and elevated channel inventories. Contribution margins for Lloyd were said to have decreased due to customer support initiatives and promotions. Another note said the company is struggling to pass cost increases to consumers due to heightened competition and substantial inventory levels in the market. High inventory in the channel, particularly for air conditioners, was highlighted as a factor that could influence primary sales in the near term.

Working capital and cash flow: pressure points in key divisions

Elevated working capital levels, especially in the cable and Lloyd divisions, were said to have adversely affected cash reserves and interest income. This matters because changes in inventory and receivables can alter cash generation even when reported profits are stable. When channel inventory is high, companies may need to calibrate dispatches and support demand through schemes, which can also influence margins. The same set of notes suggested analysts are balancing near-term softness with expectations of recovery over the medium term.

Analyst views and target prices in circulation

Motilal Oswal Securities maintained a neutral rating on Havells India with a target price of Rs 1,490. Other notes referenced a BUY rating with a target price of Rs 1,620, valuing the stock at 55x FY25 EPS, and a separate re-initiation with a BUY rating and a target price of INR 1,580 (also premised on 55x FY25E EPS). Goldman Sachs was also reported to have retained a ‘Buy’ rating on Havells along with Crompton Greaves Consumer Electricals and KEI Industries, citing stronger fundamentals and growth visibility. These views sit alongside operational qualifiers around inventory liquidation, compliance costs, and segment volatility.

Key facts table

Market impact: what investors are tracking

The solar SPV investment adds a cost and sustainability angle to the Havells story, but the market’s immediate focus, based on the provided notes, remains on demand conditions, inventory levels, and margin trajectory. Segment-level softness in ECD and lighting was specifically cited in connection with revenue de-growth in one observation, while cables and wires showed demand strength with margin pressure. Lloyd’s inventory normalisation and promotional intensity have been important variables for near-term profitability. Separately, “Caution” language referenced two warning signs flagged by GuruFocus for BOM:517354, without details in the supplied text.

Why the solar step matters alongside operating execution

Havells’ solar stake decision is positioned as a structural move to reduce fossil-fuel reliance and lower power costs, which can support competitiveness when pricing power is constrained. This comes amid commentary about difficulty passing on cost increases in a competitive market. If power costs can be managed more predictably, the company potentially gains flexibility during periods of demand volatility or promotional intensity. But the operational narrative in the provided material remains anchored in execution: managing channel inventory, normalising working capital, and stabilising Lloyd profitability.

Conclusion

Havells India’s approval to buy 26% in Kundan Solar (Pali) adds a renewable-energy lever to its Rajasthan cost strategy, while recent quarterly numbers and segment commentary underline a mixed operating environment. Investors will likely watch how inventory normalisation, working capital trends, and segment margins evolve alongside the company’s stated shift toward lower-cost, lower-fossil power sourcing.