Prabhudas Lilladher's research report on Crompton Greaves Consumer Electricals
We downward revise our FY24/FY25 earnings by 6.1%/8.1% to factor Crompton’s growth/margin guidance in its core portfolio, which expected to report lower margins against historical levels along with lower growth guidance in Butterfly. The company is currently working on stabilizing its pump/light business with 1) competitive pricing, 2) launch of new SKUs and 3) GTM in lighting segment, which will impact its margin. Crompton has also guided that incremental growth will come from kitchen appliance business of Crompton & Butterfly, lighting business and large appliance business in coming years. We believe stock will be range bound considering growth & margin guidance given by management.
However, it is trading at lower valuation and would be good bet for next 2-3 years, considering opportunity of re-rating with management change as Crompton franchise has strong market share in fans and pumps. We estimate Sales/EBITDA/Adj. PAT CAGR of 10.8%/14.7%/20.7% over FY23-25E and revise our target price to Rs371 @ 35x FY25 EPS (Rs406 earlier). Maintain BUY.
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