Dolat Capital is bullish on Crompton Greaves Consumer Electricals has recommended buy rating on the stock with a target price of Rs 275 in its research report dated July 25, 2019.
Dolat Capital's research report on Crompton Greaves Consumer Electricals
The Q1FY19 results were in line with our estimates. The ECD growth was strong, with seasonal impetus for fans and pumps. However, price erosion continued in the B2B lighting, falling 5-7% YoY. Although Crompton, is trying to offset it with premium products in B2C. Lighting margins contracted 631bps QoQ, on account of higher A&P spend and accounting provisions, while EBIT margins for ECD expanded, due to better product mix. We maintain our Sales/EBITDA/PAT in FY20E, and expect the company to report a sales/PAT CAGR of 15%/17%, respectively, over FY19-21E.
We view the company as a good adjunct between Havells and V-Guard, and maintain Buy, with an unchanged TP of `275, valuing the stock at 31x for FY21E.
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