Buy Crompton Greaves Consumer; target of Rs 290: Edelweiss

Edelweiss' research report on Crompton Greaves Consumer

Crompton Greaves Consumer’s (Crompton) healthy profit growth sustained in Q3FY18 as well, despite slowdown in fans, pumps and geyser segments. Key highlights: a) robust spurt in lighting (up 23% YoY) was offset by mere 7% YoY growth in consumer durables due to dip in geysers and tepid growth in pumps; b) EBIDTA grew a 20% YoY led primarily by gross margin expansion on account of rise in premium products & sustained cost focus; and c) while Crompton’s overall fan sales growth was lower compared to large peers, its market share in premium offerings jumped—reflected in high growth (20% YoY) over past many quarters.

Outlook

Maintain ‘BUY’ with revised TP of INR290 (INR260 earlier) as we roll forward to FY20E, estimating ~19% EPS CAGR and spurt in free cash flow over FY17‐20 led by industry‐leading growth in fans and lighting segments. For all recommendations report, click here

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