Edelweiss bullish on Crompton Greaves Consumer has recommended buy rating on the stock with a target price of Rs 280 in its research report dated July 26, 2018.
Edelweiss' research report on Crompton Greaves Consumer
Crompton Greaves Consumer (Crompton) posted results in line driven by its strategy of faster bottom-line growth than top-line expansion. Highlights: 1) consumer durables (ECD) rose 23% YoY led by strong growth in fans aided by the Air 360 launch that was well received; 2) pumps, up 30% YoY driven by volume, regained momentum from the Mini Crest launch; 3) lighting growth came in lower (2% YoY reported, 15% ex-EESL) than the last few quarters due to weak EESL volumes, which is a temporary issue; and 4) management is confident of delivering 10–15% overall growth with sustained OPM improvement led by better cost control/rising share of premium revenue even as it executes the Go-To-Market (GTM) strategy, which is showing early-stage benefits (in the west region).
Maintain BUY/SO with a TP of INR280 (at 37x PE) based on reasonable earnings/cash flow CAGR of 21/25% over FY18–20E and huge potential to expand the target market versus peers.
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