Prabhudas Lilladher's research report on Crompton Greaves Consumer Electricals
We increase our FY21/22/23 earnings by 6.7%/ 3%/ 3.3% respectively given 1) resilient sales momentum across product categories 2) sustained market share gains through superior market penetration and GTM initiatives and 3) improving margins led by cost reduction program. Crompton remains upbeat on the future demand trends given 1) encouraging secondary sales data despite likelihood of up stocking by trade ahead of price hikes 2) resilient demand momentum witnessed in small towns and rural India 3) market share gains from unorganized players and 4) steady distribution expansion.
Outlook
We remain structurally positive on Crompton and like the company’s strategy of investing in strategic initiatives 1) product innovation 2) distribution & GTM initiatives 3) well defined plan of entering and scaling up new categories. We estimate 17% PAT CAGR over FY20-23 and assign a target price of Rs447 @ 40xFY23 EPS (earlier Rs400@37xFY23 EPS). We expect back ended returns post 60% rally in 4 months, we recommend Buy on declines.
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