Buy Crompton Greaves Consumer Electricals; target of Rs 540: ICICI Securities

Buy

ICICI Securitie's research report on Crompton Greaves Consumer Electricals

Crompton reported revenue/PAT growth of 13.9%/24.4% YoY. Gross margin expanded 106bps YoY on channel mix and price increases (across segments). EBITDA grew 25.1% YoY in-spite of higher other expenses (higher ad spends: +29% YoY). EBITDA margin expanded 97bps YoY. Profitability was lifted by higher other income (+20.1% YoY) and lower finance cost (-24.6% YoY).

Outlook

We model Crompton to report revenue/PAT CAGR of 11.4%/27.3% YoY. We upgrade to BUY from ADD with a revised TP of INR 540 (earlier INR 360; implied P/E of 49x FY26E). We model growth in its core businesses to continue with revival in lighting segment in FY25E. However, weakness in Butterfly shall persist until H1FY25-end.

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