Buy Crompton Gr. Con; target of Rs 270: Motilal Oswal

Motilal Oswal is bullish on Crompton Gr. Con has recommended buy rating on the stock with a target price of Rs 270 in its research report dated May 16, 2018.

Broker Research

May 23, 2018 / 15:32 IST

26 Aug, 2025 12:21

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Motilal Oswal's research report on Crompton Gr. Con

CROMPTON’s results were broadly in line with expectations. Sales grew 7.6% YoY (12.9% YoY on an LTL basis) to INR11.3b, driven by healthy growth in the Lighting division (+11.8% YoY, +21% YoY LTL). However, the Electrical consumer durables (ECD) segment exhibited a subdued performance (+1.9% YoY, 10% LTL growth), impacted by the implementation of the go-to-market strategy in the north region, which led to sales decline because of inventory destocking. Within ECD, post a weak 3QFY18, domestic pump sales picked up and the pump segment grew by 13-14% YoY. EBITDA for the quarter improved 27.5% YoY to INR1.6b, with the margin improving 230bp YoY to 14.6%, led by a better revenue mix. Net profit of INR1.0b (+29% YoY) was in line with our estimate. For FY18, sales stood at INR46b (+4.6% YoY, ~9.3% YoY LTL), EBIDTA at INR5.3b (+10% YoY) and adj. profit at INR3.2b (+14.3% YoY).

Outlook

We maintain our Buy rating, with a revised TP of INR270 (36x FY20E EPS of INR7.5, in line with its historical valuation of 37x P/E multiple since listing).

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