Buy CG Consumer Electricals; target of Rs 300: Dolat Capital

Dolat Capital's research report on CG Consumer Electricals

Q1 sales were down 47% resulting in a PAT decline of 39%. However, margins were helped by good cost management, especially in ad expenses, which enabled CG Consumer to maintain 14% margins. At segmental levels, ECD margins were flat while lightning margins though flattish yoy, declined sequentially due to lower operating leverage. Crompton has seen recovery since the opening of the lockdown, with June activities ~90% of last year levels. However, uncertainty in the industry continues with fresh restrictions.

Outlook

CG consumer remains best placed for faster recovery within the FMEG space given its main portfolio of fans and lighting are low ticket, replacement items. We continue to maintain our Buy our rating to Buy with a TP of Rs 300, valuing the stock at 38xFY22E.

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