Target: ₹48,740CMP: ₹39,581.50Honeywell Automation India (HWA) sales for Q1-FY27 were in-line, but gross margin strength observed in Q4-FY26 continued at 41 per cent (versus JMFe of 39 per cent). Thus, possibly due to a combination of higher margin order execution and reduced loss order provisioning, EBITDA margin saw about 240 bps y-o-y expansion to 14.3 per cent significantly higher than JMFe of 12.4 per cent. This resulted in 15 per cent beat on EBITDA.We expect gross margins to remain stable over FY27E–28E at 40-41 per cent leading to 15-16 per cent EBITDA margins. If management’s ‘razor and razor blade’ approach succeeds then EBITDA margin could potentially rise to 18-20 per cent. . Furthermore, HWA remains strong on West Asia exports where we anticipate continued strength in capex in oil & gas, renewables, electrolysers, transmission equipment and data centres. The sharp depreciation of INR versus USD would also aid HWA. Services and exports are higher margin; thus, we do see potential for margin upside.While HWA has risen 50 per cent YTD FY27, it is trading at 51x/44x FY27E/28E EPS, significantly lagging valuation of peers (ABB/SIEM).HWA trades near lower-end of its long-term (10Y) trading range of 40-60x, largely reflective of the margin weakness seen in the past and, importantly, lack of management communication over the last few years.We maintain Buy with a higher TP of ₹48,740 (earlier ₹44,000) and roll forward to September 2028.Published on July 30, 2026