Crompton reported a weak quarter, as expected. However, there were clear advances in execution and portfolio realignment. Takeaways: (1) The company continued to gain market share in core categories even in a softer quarter. (2) BLDC products registered ~50% growth YoY, supported by strong traction from MT and e-commerce. (3) Solar business continues to grow ~100% YoY supported by healthy order pipeline. (3) TPW and LDA business suffered due to price inflation and increase in competitive intensity. (4) SDA business registered double-digit growth on the back of new products and festive buying. (5) Lighting business delivered healthy margins due to superior product mix. (6) The company remains selective in B2B lighting projects. It will focus more on select infrastructure projects.
OutlookWe model Crompton to report revenue/PAT CAGRs of 7.3%/10.6% over FY25–28E. At our DCF-based revised target price of INR 340 (earlier INR 380), implied target P/E works out to 29x FY28E EPS. Maintain BUY.
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