Buy Crompton Greaves Consumer Electricals; target of Rs 377: Prabhudas Lilladher

Prabhudas Lilladher's research report on Crompton Greaves Consumer Electricals

We downward revise our FY24/25/FY26E earnings by 7.9%/6.4%/5.9% to factor in margin contraction in ECD & Butterfly businesses with higher overhead expenses. Crompton Greaves Consumer Electricals (Crompton) has delivered industry leading growth in ECD at 16.5% YoY driven by strong momentum in Fans (+18% YoY) and Appliances (+17% YoY). Crompton’s growth strategy at current margins remains intact as it 1) restructured organization with five business units, 2) appointed second level leadership team, 3) setup innovation center to continuously increase SKUs across BUs, 4) diversified GTM channels by leveraging new channels & building future ready channels and 5) increased focus on A&P.

Outlook

Although the strategy may impact FY24 financials, we expect better growth FY25 onwards. We estimate Revenue/EBITDA/ PAT CAGR of 13.4%/13.5%/17.8% over FY23-26E. Maintain ‘Buy’ with TP of Rs 377 (earlier Rs 401), valuing at 35x Sep’25 earnings.