Crompton Greaves Q1 Review - Strong All-Round Show With Broad Based Growth; Reiterate Add: Yes Securities

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Yes Securities Report

Crompton Greaves Consumer Electricals Ltd. has reported lower than estimated revenue growth on account of subdued performance of Butterfly Appliances.

Electrical consumer durable revenue grew 21% (in line with estimates). Fans have witnessed growth of 16%, pumps (+30%) and appliances (+24%) registering strong growth.

Appliance growth has been driven by air-coolers and mixer grinders. Air-cooler delivered volume growth of 68%, supply glitch had resulted in some volume loss for the air-coolers.

Company continues to gain share in its key categories of fans, pumps and appliances. Margins in ECD stood at 15% expansion of 227 bps YoY despite higher advertising and promotion spends. Lighting revenue growth was impacted as company has stopped selling conventional lighting and there has been price erosion in LED lights, B2B is segment saw robust growth.

As far as Butterfly appliances is concerned Crompton is implementing corrective action and expects growth from H2 FY25. Crompton has delivered on the growth as well as margin front and management is expecting industry leading growth as it drives premiumization across the product category.

Crompton’s 2.0 strategy has started to pay dividends with company gaining market share in its core categories and profitability has started to improve. Crompton would be focusing on growth with improvement in profitability.

The company has started to deliver on expectations on consistent basis and should command higher multiple in line with peers. We now increase our target multiple to 45 times and reiterate our Add rating with target price of Rs 517. Moreover, company is generating strong cashflows and has now become net cash company.

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Yes Securities Crompton Consumer Q1FY25.pdf

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