Buy Crompton Greaves Consumer; target of Rs 280: Edelweiss
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.
September 18, 2018 / 02:19 PM IST
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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