Crompton Greaves Q3 Review - 2.0 Strategy To Impact Margins In Near Term; Upgrade To 'Add': Yes Securities

Yes Securities Report

Crompton Greaves Consumer Electricals Ltd. has reported lower than estimated revenue with its consolidated revenue missing estimates by 4.9%.

Electrical consumer durable for second quarter in a row has outperformed peers with ECD revenue growing 18.5%. Fans have witnessed strong momentum with growth of 11%, pumps (+28%) and appliances (+23%) registering strong growth.

Appliances growth has been driven by water heater with Crompton becoming one of the top three brand in water heater. Company continues to gain share in its key categories of premium fans, water heaters and pumps.

On lighting front Crompton has managed to arrest the decline and has witnessed flattish revenue despite price erosion in LED bulbs and battens and decline in traditional lighting business. Company is seeing increased traction in B2B lighting and is executing projects such as Mumbai costal road and has orders from Ahmedabad and Chennai municipal corporation.

As far as Butterfly Gandhimathi Appliances Ltd. is concerned Crompton is implementing corrective action and implementing go-to-market initiatives to improve its reach beyond South.

Management believes results will start showing after couple of quarters. Crompton will have to continue to invest in brand building and is not shying away from the increased brands spends.

On absolute front it’s advertising and promotion spends have been increased by Rs 350 million as it focuses on premiumisation and making Butterfly sustainable pan India brand.

Further investments will have to be made in building capabilities, research and development and GTM initiatives resulting in lower than historical margin in near term.

Crompton is poised for change with its 2.0 strategy where it will focus on outperforming industry and peers in terms of revenue growth and focus on improving absolute profit growth. We believe company is on the right path, however benefits of the strategy will require sustained investments and efforts.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.