Buy Crompton Greaves Consumer Electricals Ltd For Target Rs.330 by Prabhudas Liladhar Capital Ltd
Moderation in ECD growth; outlook remains constructive
CROMPTON’s ECD segment delivered 10.6% YoY growth, supported by moderate performance across Fans, Pumps and Domestic Appliances. BLDC fans remained a key growth driver with ~44% growth, while Ceiling Fans and Pumps continued to gain market share. Domestic Appliances registered double-digit growth led by Water Heaters, which also strengthened their market position. Lighting segment grew 15.4% YoY, driven by double digit growth in both B2C and B2B segments, although B2B margins were impacted by pre-contracted lower-priced orders. Butterfly revenue increased 14.0% YoY, led by broad-based growth across channels and market share gains in mixer grinders, pressure cookers and glass cooktops. The company implemented high single-digit to low double-digit price hikes across categories to offset commodity inflation, while the Solar Rooftop business remained in ramp-up mode with a ~INR5bn order book, of which ~INR4.5bn is expected to be executed over the next six to eight months.
We estimate revenue/EBITDA/PAT CAGR of 14.8%/20.0%/20.7% over FY26-28E. We have downward revised FY27/FY28 earnings by 2.0%/1.7%, factoring in lower revenue estimates, partly offset by improved EBITDA margin assumptions. We maintain ‘BUY’ rating with revised TP of INR330 (INR319 earlier), based on 28x Mar’28 earnings.
Q1FY27 performance:
Revenue grew by 11.8% to INR 22.3bn (PLe: INR 21.4bn). Gross margin stood at 31.2% (PLe: 31.1%), contracted 90bps YoY. EBITDA grew by 17.1% to INR 2.2bn (PLe: INR 2.1bn) with EBITDA margin expanding 40bps YoY to 10% (PLe: 10%). PAT grew by 15% YoY to INR 1.4bn (PLe: INR 1.3bn). ECD segment grew 10.6% YoY to INR 17.5bn Lighting revenue grew 15.4% YoY to INR 2.7bn and Butterfly grew by 18.4% to INR 2.1bn. ECD EBIT margin expanded by 20bps YoY to 13.5%, while Lighting EBIT margin contracted by 70bps YoY to 12.0% and butterfly margins stood at 4.2%, flat YoY.
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