Buy CG Consumer; target of Rs 268: HDFC Securities

HDFC Securities is bullish on Crompton Greaves Consumer Electricals has recommended buy rating on the stock with a target price of Rs 268 in its research report dated October 27, 2017.

November 03, 2017 / 16:21 IST

26 Aug, 2025 12:21

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HDFC Securities' research report on Crompton Greaves Consumer Electricals

Crompton’s net revenue grew 9.8% to Rs 9.6bn. Like-to-like revenue growth was at 15.9%, and our expectation was 9.3%. Adj. EBITDA (Ex-ESOP) and APAT was up 33% and 39%, respectively. Restocking was partial during 2Q, as recovery was slow for seasonal products. However, even in this challenging phase, Crompton gained market share in Fans and LED lamps (B2C). Fans gained a sharp 3 to 4% market share, primarily in the premium segment. Premium Fans contribute 18% to Crompton’s Fans business. Management’s focus area remains the same, i.e. (1) Cost rationalisation (2) Premiumisation, and (3) Competitive pricing. Our structural thesis is unchanged. Crompton is arguably India’s strongest ‘mass premium’ brand in the Consumer Electricals space. We continue to like Crompton owing to (1) Premiumisation in Fans, (2) Healthy growth in the LED business, (3) Brand leveraging in appliances (4) Focus on efficient distribution (ROI model), and (5) an asset-light business model.

Outlook
Given the healthy earnings growth (21% EPS CAGR over FY17-20E), asset-light business model and FCF generation of Rs 5-6bn in FY19-20E, high valuations are justified. We reiterate BUY with a TP of Rs 268, based on 35x Sep-19 EPS.

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