Crompton Greaves Consumer Electricals Ltd. share price target

Crompton reported strong revenue growth of 22.7% YoY (standalone revenues declined 3.8%, due to unfavorable base and weakened consumer demand).

Continued margin pressure led to underperformance

Q1 miss on margins due to one-time costs; expect margins to course correct in 9MFY23 against backdrop of lower commodity costs

Crompton has largely maintained its profitability in a tough year (FY22), maintaining healthy revenue growth and market shares in almost all segments. Its timely price hikes, improvement in revenue mix and cost-saving initiatives (Rs2.03bn via project Unnati) were chief reasons for retaining profitability.

Leadership maintained in fans and pumps, while being a top player in lighting. BGAL acquisition to strengthen adjacency offerings

Volume growth of Crompton Greaves remains under pressure in this high inflation environment; lower effective disposable income has likely reduced discretionary spends. However, the company safeguarded its profitability, when (almost all) its peers suffered steep margin contraction. It highlighted timely price hikes, improvement in revenue mix and cost-saving initiatives as primary reasons for maintaining profitability.