Crompton Greaves Consumer Electricals Ltd. share price target

The BEE rating transition-led uncertainties in the fans segment seems to have come to an end at the industry level. We believe Crompton’s fan business is also likely to turnaround in H2FY24 and FY25. Pricing action undertaken by Crompton in Q2FY24 partly confirm the normalisation of business activities in fans.

ECD revenue growth ahead of peers but lighting segment declines in Q2

Crompton has done key fundamental changes to its business under strategy 2.0 which are likely to be DCF accretive in our view. (1) it plans to divide the business in multiple SBUs which will likely drive the accountability and improve efficiencies, (2) there will be separate on-ground sales teams for multiple product(s). It is likely to result in stronger connect with the trade and higher throughput-per-store.

Lighting division moving to a new corporate structure, eyeing commercial orders, and pruning prices to spur volumes

Quarterly Update Q1FY24

Crompton reported relatively weaker Q1FY24 than its peers as its results were impacted by higher BEE related costs, price correction in pumps and weak sales of Butterfly. However, it has rolled out new strategy as Crompton 2.0 and it plans to invest in (1) innovation, (2) improvement in supply chain and go-to-market initiatives, (3) portfolio premiumization and (4) additional investments in digital.

ECD revenue growth at par with industry but lighting segment lagged peers in Q1