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On the revival path

Q4 revenue up 12%, driven by demand pickup in ECD

Crompton Greaves Consumer Electricals (CROMPTON IN) standalone
revenue grew 12% YoY to INR 18bn in Q4FY24 at a three-year CAGR of
6%, in line with our estimates, driven by the onset of strong Summer
and new product launches. Segment-wise, revenue from electrical
consumer durables ([ECD]; 84% of Q4FY24 sales) increased 14% YoY vs
Havells’ 22% YoY, and V-Guard’s 28% YoY. Lighting (16%) continues to
remain flat YoY for the second consecutive quarter vs Havells’ 5%.

Fans and appliances lead the way

In Q4FY24, the ECD segment grew 14% YoY, led by healthy traction in
fans and appliances. Fans revenue was up 13%, driven by robust
volume growth, with market share gains. Pumps saw 9% growth, led by
growth in the agri pumps segment. During the year, CROMPTON
secured solar pumps orders worth INR 1.2bn, out of which INR 280mn
has been executed. Appliances revenue grew 27% YoY with robust
growth in small appliances and air coolers.

One-offs lead to EBITDA loss for Butterfly; rebound by Q2FY25

In Q2FY24, Butterfly Gandhimati (BGAM) saw a 11% YoY fall in top line,
while EBITDA plummeted to negative INR 198mn due to reorganization
of bottles and flasks portfolio, one-time settlement with channel
partners, full-year Extended Producer Responsibility (EPR) liability
crystallized in Q4, and increased marketing spend, with total one-offs of
INR 150mn. However, management targets a revival in top line and
margin from Q2FY25.

Valuation: reiterate Accumulate with a higher TP of INR 455

We have incorporated Butterfly Gandhimathi’s (BGAM) financials into
CROMPTON. We lower our EPS by 2% in FY25E on slower revival in
BGAM but raise our EPS by 1% in FY26E on robust growth, fueled by real
estate demand. We increase our TP to INR 455 from INR 325 on 38x (from
28x; in line with electrical industry average P/E and improved demand
visibility) March 2026E P/E as we roll forward by a quarter. We reiterate
Accumulate. With consistent demand revival, there is a possibility of

rerating as CROMTPON has a strong brand recall, one of the industry-
leading EBITDA margin, and the go-to-market strategy. We expect an

earnings CAGR of 32% during FY24-26E, with an average ROE and ROCE
of 29% & 27%, respectively, during FY24-26E.

Please refer disclaimer at Report
SEBI Registration number is INH000000933