Prabhudas Lilladher is bullish on Crompton Greaves Consumer Electricals has recommended buy rating on the stock with a target price of Rs 267 in its research report dated May 18, 2020.
Prabhudas Lilladher's research report on Crompton Greaves Consumer Electricals
We cut Crompton's FY21/FY22 EPS by 16.7% and 8.4% given Covid-19 led disruption in demand. However, we believe Crompton is better placed than most of its peers given 1) low discretionary nature of products (fans, lighting and pumps.) 2) lesser dependence on seasonal products & 3) limited exposure to B2B segment. With demand uncertain, Crompton has implemented additional cost saving measures (Rs1bn) to rein in costs. However, to drive long term growth Crompton shall continue to invest in longer term strategic initiatives like 1) distribution & GTM initiatives 2) Product innovations (incl Health & Wellness) & 3) entry in new categories.
We estimate 14.9% PAT CAGR over FY20-22. Maintain BUY with a target price of Rs267/- (30x FY22 EPS).
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