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Dolat Capital Report
CG Consumer Electricals (CGCEL) registered revenue growth of 15.7% YoY in Q4FY23, driven by 7.7% increase in ECD, partially restricted by 12.1% decline in the Lighting segment.
In Q4, CGCEL outperformed peers –Havells (-14%) and Orient (-20%) in the ECD segment. This is mainly attributed to relatively better performance in the Fans category (flattish growth) on the back of calibrated approach to manage BEE transition and improved share in premium fans.
We like CGCEL due to its leadership position in core categories, strong distribution network, premiumization and continuous innovation. Merger with Butterfly Gandhimathi (BGAL) should unlock growth & cost synergies and fortify CGCEL's position in the kitchen appliance category. We build in revenue and PAT CAGR of 11%/26% resp over FY23-FY25E. The stock has corrected 24% YTD. It is trading at the lowest multiple among consumer electrical companies and offers a favorable risk reward. We assume coverage on the stock with a TP of Rs 315 based on 28x FY25E EPS
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