Buy Crompton Greaves Consumer Electricals Ltd For Target Rs.340 by Motilal Oswal Financial Services Ltd
Building the next growth phase
Crompton Greaves Consumer Electricals (CROMPTON) held its Investor Day 2026 to discuss its long-term growth plans, product innovations, product and brand positioning, and GTM strategy.
CROMPTON is targeting ~13-14% revenue CAGR over FY26-29 and aims to double revenue over the next five years (FY31). It targets exit EBITDA margin of ~11-12% over the next three years (by FY29) and 12%+ by FY31. New businesses are expected to contribute ~20% of revenue by FY31. The company has expanded its total addressable market (TAM) from ~INR0.8t to ~INR1.6t through new product development (NPD) and entry into adjacent categories such as wires, water purifiers, and solar. NPD intensity has increased, with 211 products launched in FY26 vs. 165 in FY24, driving the share of revenue from new products to 17% from 7% over the same period. It has also been successful in reducing seasonality, with seasonal products now accounting for ~20% of sales vs. ~42% earlier. It aims to further strengthen its presence in North and East India, while opportunities in personalized cooling, BLDC fans, and other emerging categories are expected to support growth.
In 1QFY27, CROMPTON delivered strong performance with ~12%/17%/15% revenue/EBITDA/PAT growth, despite commodity inflation and temporary supply disruptions. The company’s disciplined pricing actions, cost-saving initiatives, and operating leverage supported margin expansion (OPM up 40bp YoY to ~10%). We estimate CROMPTON to report 13%/18%/21% in revenue/EBITDA/PAT CAGR over FY26-28. We estimate its OPM to expand to ~11% by FY28 from ~10% in FY26. We reiterate our BUY rating on the stock with a TP of INR340.
New categories and distribution expansion to drive growth
The company is expanding into wires, solar, and water purifiers, with Crompton Rhion marking its entry into the premium water purifier segment. Solar remains highly fragmented but is growing at a healthy pace, and the company believes its brand strength and distribution provide a strong rightto-win, although servicing capabilities will be critical. It also sees increasing consumer acceptance of branded wires and plans to make aggressive investments in distribution. Distribution expansion remains a key focus, particularly in towns with 10K-100K population, while markets below 10K population will be penetrated progressively. The company also plans to increase its product presence on quick commerce and drive premiumization through modern trade. General trade currently contributes ~66% of sales, while B2G and alternate channels account for ~5% and ~29%, respectively. The company believes its principal competitive advantage lies in its combination of brand, distribution, and service, with ~250,000 retailers, ~1,300 service partners, a retailer every ~4 km, and a service partner every ~5 km. The brand is present in roughly one-third of Indian homes.
Transforming the operating model under Crompton 2.0
The company’s growth strategy is anchored around ‘Crompton 2.0’, with four pillars: protect and grow the core, win in the kitchen, transform lighting, and foray into new segments. Key enablers to accelerate its growth journey include product innovation, focused go-to-market execution, range expansion, and entry into 2-3 attractive white spaces. The transformation is increasingly being embedded into the organization through greater business-unit autonomy and accountability, five centers of excellence spanning GTM & service, procurement, transformation, new product development, and transaction processing, along with the digitization of IT, marketing, and supply chain functions. It is effectively moving from a product/channel-led organization toward a consumer-led, digitally-enabled, and integrated operating model. It has built a proprietary consumer-intelligence system incorporating more than 30m data points, 740+ hours of consumer interactions, and ~18k respondents across nine categories. The objective is to identify consumer pain points and translate them directly into engineering specifications.
Valuation and view
In FY26, investments in R&D, advertising, and organizational capabilities weighed on overall OPM, while margins in Butterfly, Lighting, and ECD improved, supported by premiumization. The company is net cash positive, with a net cash balance of INR1.8b in FY26, and generated robust free cash flow of ~INR6.5b+ (annually over FY24-26). We believe higher investments in advertisement and promotional spending, along with efforts to strengthen the brand and product portfolio, will support the company’s future growth trajectory. We estimate CROMPTON to report ~13%/18%/21% in revenue/EBITDA/PAT CAGR over FY26-28. We estimate its OPM to expand to ~11% by FY28 from ~10% in FY26. CROMPTON trades inexpensively at 27x/22x FY27E/FY28E EPS. We reiterate our BUY rating with a TP of INR340, based on 30x FY28E EPS
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