Buy Crompton Greaves Consumer Electricals; target of Rs 440: ICICI Securities

ICICI Securities research report on Crompton Greaves Consumer Electricals

As true market leader, Crompton is investing to drive premiumisation aggressively in its fan portfolio. As of now, its premium portfolio accounts for 23% of revenues (industry: 40%) in fans. The company has launched Nucleus, an advanced BLDC platform, and Xtech, an advanced induction motor platform. Its innovation includes HS Duro, which is India’s hi-speed 5-star induction fan and Superflo, which offers 25% more air. Crompton is also investing in TPW fans, which are growing in mid-teens and there is steady potential for it to grow at a faster rate than ceiling fans due to low penetration. The rest of the segments are doing well too. With the expectation of a strong summer, air coolers are expected to report strong growth. There will also likely be healthy growth in solar pumps while residential pumps may grow in line with market. Revenue decline has also been arrested in Butterfly with stability in margins. Maintain BUY.

Outlook

We model Crompton to report revenue/PAT CAGRs of 10.3%/19.4% over FY24–27E and RoE be above cost of capital in FY27E. At our DCF-based target price of INR 440, implied target P/E works out to 38x FY27E EPS. Maintain BUY.