Buy Crompton Greaves Consumer Electricals; target of Rs 405: Nirmal Bang

Nirmal Bang is bullish on Crompton Greaves Consumer Electricals has recommended buy rating on the stock with a target price of Rs 405 in its research report dated March 27, 2023.

Broker Research

March 27, 2023 / 15:39 IST

Buy-Sell

26 Aug, 2025 12:21

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Nirmal Bang's research report on Crompton Greaves Consumer Electricals

Crompton Greaves Consumer Electricals Ltd (Crompton) and Butterfly Gandhimathi Appliances Ltd. (Butterfly) informed the exchanges about a Scheme of Amalgamation of Butterfly with Crompton on March 25, 2023. Upon merger, the public shareholders of Butterfly, as on the record date, will receive 22 equity shares of Crompton for every 5 equity shares held by them in Butterfly, as a consideration for the merger. Post-merger, the public shareholders of Butterfly will hold ~3.0% stake in the combined entity. The management highlighted that the merger aims to unlock various revenue & cost synergies, achieve economies of scale by pooling the combined resources and provide an impetus to grow across all parts of India. The management further highlighted that the merger will enable more efficient allocation of capital and result in simplification of the corporate structure. It expects the merger to be completed in 12-14 months, subject to necessary statutory and regulatory approvals. It expects the merger to be EPS accretive from year one itself (FY24). Overall, Crompton aims to outpace industry growth, driven by premiumisation, continuous innovation and deeper distribution reach. Investments have been stepped up in advertising, rural programs, new business development, R&D and sourcing capability. The merger with Butterfly sets up a platform for a full-fledged kitchen appliances play for Crompton and will accelerate realization of cost as well as growth synergies over the medium term.

Outlook

We continue to maintain BUY on Crompton with an unchanged target price (TP) of Rs405, valuing it at 35x FY25E earnings.

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