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Earnings in line; strong growth across segments Execution back on track; 2Q momentum improving

* Crompton Greaves Consumer Electricals (CROMPTON)’s 1QFY27 earnings were in line with our estimates. Revenue grew ~12% YoY to INR22.4b (led by ~11-18% growth across key segments). EBITDA rose ~17% YoY to INR2.2b. EBITDA margin was up 45bp YoY at ~10%. PAT grew ~15% YoY to INR1.4b.

* Management indicated that 1QFY27 was impacted by commodity inflation and temporary supply disruptions; however, disciplined pricing actions, costsaving initiatives and operating leverage supported margin expansion. Crompton said ~80% of commodity inflation has been passed on to consumers by taking price hikes in the range of high single digits to low double digits. It continued to gain market share in ceiling fans and pumps. It also highlighted notable progress in its brand transformation journey, with first visible outcomes expected by Aug'26 end and a series of brand launch events planned over the next 3-4 months.

* We maintain our estimates for FY27/FY28. We value CROMPTON at 30x FY28E EPS to arrive at our TP of INR340. Reiterate BUY.

ECD revenue up ~11% YoY; margin at 13.5% (est. 13.0%)

* Consol. revenue/EBITDA/adj. PAT stood at INR22.4b/INR2.2b/INR1.4b (+12%/+17%/15% YoY and -1%/+1%/+2% vs. our estimates). Gross margin dipped 90bp YoY to ~31%. OPM surged 45bp YoY to ~10%.

* Segmental highlights:

1) ECD revenue surged ~11% YoY to INR17.5b, EBIT increased ~12% YoY to INR2.4b (in line), and EBIT margin rose 20bp YoY to 13.5%.

2) Lighting revenue increased by ~15% YoY to INR2.7b, EBIT grew ~9% YoY to INR323m, and EBIT margin dipped 70bp YoY to ~12%.

3) Butterfly revenue increased ~18% YoY to INR2.1b, EBIT rose ~18% YoY to INR90m, and EBIT margin remained flat YoY at ~4%.

Valuation and view

* Crompton’s 1QFY27 performance was in line with our estimates, with doubledigit growth across all key businesses. We believe the company’s growth outlook is supported by steady momentum in premium fans, rapid expansion of the BLDC portfolio, recovery in lighting business, and the gradual scale-up of its renewable and wire businesses. The ongoing brand transformation and assetlight expansion strategy should further enhance its competitive position.

* We estimate CROMPTON to report a CAGR of 13%/18%/21% in revenue/EBITDA/PAT over FY26-28. We estimate its OPM to expand to ~11% by FY28E from ~10% in FY26. RoIC is expected to improve to ~29% by FY28 (aided by impairment of goodwill driving lower capital base) from ~23% in FY26. RoE is likely to be ~17% in FY28E vs. ~14% in FY26. CROMPTON trades at 29x/24x FY27E/FY28E EPS. We reiterate our BUY rating with a TP of INR340, based on 30x FY28E EPS.

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