Crompton Greaves Consumer Electricals Ltd. share price target

5-8% price increase across portfolio to ward off Inflation resilient sales momentum across product categories 2) sustained market share gains through superior market penetration and GTM initiatives and 3) improving margins led by cost reduction program. Crompton remains upbeat on the future demand trends given 1) encouraging secondary sales data despite likelihood of up stocking by trade ahead of price hikes 2) resilient...

Incremental margin expansion to be tepid as advertising, marketing and overheads will gradually perk up We increase our FY21/22/23 earnings by 15.7%/ 3.6%/ 5.3% respectively and reiterate our positive stance on Crompton given 1) strong sales with market share gains in core categories of Fan, Pumps 2) Focus on scaling up large categories like Geysers, Coolers and Mixer Grinders 3) Superior market penetration and on shelf availability due to go to market initiatives and 4)...

A strong growth recovery, end of price erosion in LEDs and cost savings saw a result beat from the company (Exhibit 1). The gradual m-o-m recovery seen in the Jul-Sep quarter is continuing in October, indicating...

Thus, we expect value growth in the Lighting segment to follow volume growth while margins should be on an uptrend 2QFY21 onwards (full quarter impact expected to reflect in 3QFY21 only). been under stress for the past two years now owing to price erosion at the industry level. Thus, despite the double-digit volume growth, Lighting revenues have dropped by 5% CAGR over FY18-20. Thus, though the Lighting segment formed 25% of Cromptons turnover in FY20, the segmental PBIT contribution was limited to just 9%. Cromptons ECD segment has been performing well with double-digit growth for eight consecutive quarters prior to the COVID-19 outbreak in Mar20. The margin performance is commendable and is the best in the industry. Since Cromptons categories have higher replacement demand, we see higher probability of steady performance in the coming quarters and in FY22E (v/s negative impact for peers from weak consumer demand).

27 July 2020 CROMPTONs top line was 11% below estimates. Earnings were 14% above expectations on account of strong cost controls, led by a cut in ad-spends and the ongoing cost rationalization exercise (Project Unnati). Although a large part of the cost control measures (e.g. ad-spends) may not be recurring, the business model strength of the company is impressive in times of a crisis. Demand activity in Jun20 is back particularly at ~85% for fans and at ~90% for overall ECD segment. Management has indicated that there was no MoM sales decline observed, despite pent-up demand coming in post lockdown. Improvement in working capital cycle helped in further strengthening of the Incorporating 1QFY21 performance, we have increased our FY21E EPS by 12%, while FY22E EPS remains unchanged. Maintain unchanged TP of INR285 (32x FY22E EPS). Revenues declined 47% YoY to INR7.1b (11% below expectation).

Crompton's numbers are a beat on all fronts. Revenue outperformancewasledbyfasterrevivalinitsB2Cbusinessin June,whereinitmanagedtorecoverto90%oflastyear'slevel. Secondarysalespickupwassimilartoprimarysalesandoverall...

Crompton Concall re-affirmed our positive stance with resilient underlying demand, steady build-up in activity levels post lockdown (90% levels in June backed by secondary sales data), strong sales trend in Appliances (Geysers and Mixer Grinders) and improving balance sheet (Net cash at Rs4.5bn v/s Rs2.37bn in March20). Although Crompton has implemented an additional cost saving program (in addition to Project Unnati), near term localized lockdowns remain a near term threat to recovery. However, to drive long term...