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Scaling beyond core; multi-engine growth drivers

* Crompton Greaves Consumer Electricals’ (CROMPTON) core total addressable market (TAM)—comprising fans, residential & agri pumps, lighting, and appliances (LDA & SDA), including kitchen appliances—stood at INR770b. Its successive entry into solar pumps, rooftop solar, and now residential wires expands this TAM to over INR1.63t, effectively doubling its market opportunity. CROMPTON is the #1 player in fans, #1 brand in residential pumps, #2 in water heaters (general trade), ranks among the top three players in air coolers, and is a top-three brand in kitchen appliances (Butterfly) in South India.

* Fans remain CROMPTON’s primary growth engine, with premium products (BLDC and premium induction) now contributing ~25% of the mix vs. ~12– 15% five years ago, targeting ~40% over the medium term. Channel checks indicate proactive inventory build-up ahead of the summer season, signaling improving demand confidence. Price hikes of 2-3% taken in JanFeb’26 are expected to partly offset input cost pressures, with further hikes expected in the coming months.

* The solar segment is shaping up as a meaningful medium-term growth driver for CROMPTON. It is targeting ~INR20b of revenue over the next 2– 3 years. In solar pumps, the INR80b–100b replacement opportunity from the conventional-to-solar transition offers significant headroom, with even a 10% share translating into INR8b–10b revenue potential.

* The company’s foray into retail wires represents a strategic adjacency, leveraging its strong B2C brand equity and distribution reach to tap a large addressable market. It plans to focus on the retail segment through an outsourced model, aiming for high single-digit EBIT margins while maintaining disciplined RoCE.

* We expect CROMPTON to report a revenue/EBITDA/PAT CAGR of 8%/14%/17% over FY26-28. We estimate its OPM to expand to ~11% by FY28 from ~10% in FY26. CROMPTON trades at 29x/24x FY27E/FY28E P/E. We reiterate our BUY rating with a TP of INR350, based on 33x FY28E EPS.

Fans demand improving; BEE transition to drive market share gains

* Fans remain the company’s primary growth driver. Premium fans (BLDC + premium induction) account for ~25% of CROMPTON’s fan mix vs. ~12- 15% five years ago, with the company targeting an increase to ~40% going forward. Our channel checks suggest that retailers and distributors are building inventories ahead of the peak summer season, reflecting improving confidence in demand recovery. Shareholding Pattern (%) As of Dec-25 Sep-25 Dec-24 Promoter 0.0 0.0 0.0 DII 65.8 61.3 53.0 FII 20.6 25.6 34.4 Others 13.7 13.2 12.5 FII includes depository receipts Stock Performance (one-year) 180 240 300 360 420 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Crompton Gr. Con Nifty - Rebased 6 March 2026 9

* The current BEE transition appears more efficient than the Jan’23 mandatory star-labeling implementation. This time, industry players are better prepared, with regulatory timelines anticipated and production schedules recalibrated in advance. As a result, inventory planning, model changeovers, and dispatch alignment have been executed with better discipline, limiting channel dislocation. Channel checks indicate that a significant portion of the excess pretransition inventory was liquidated during 3Q, supported by dealer incentives and an aggressive secondary sales drive. The residual inventory overhang remains modest and is expected to normalize fully by 1QFY27, suggesting a smoother and shorter transition cycle.

* The BEE 2.0 energy efficiency mandate (effective Jan’26) represents a structural tailwind for organized players. Industry estimates suggest that ~30–40% of unbranded/semi-branded production may not economically meet the new norms, implying meaningful market share gains for organized players over the next 12-18 months. CROMPTON’s pre-emptive investments in its Nucleus (BLDC) and XTECH (induction) platforms position it well to capture market share.

* In FY26-27, fans are expected to witness 100-150bp gross margin expansion, driven by a rising BLDC mix and savings under the UNNATI cost optimization program. While near-term commodity cost pressures remain, the company has taken price hikes of ~2-3% in Jan-Feb’26 to partly offset the impact.

Solar business built for scale; among the top three players in solar pumps

* The solar segment is emerging as a meaningful medium-term growth lever, with management outlining a revenue potential of INR20b over the next two to three years. In solar pumps, CROMPTON is among the top-three players and sees a significant replacement opportunity as traditional agricultural pumps transition toward solar alternatives. The addressable replacement opportunity is estimated at INR80b-100b; even a 10% market share could translate into INR8b– 10b of revenue.

* While the KUSUM 2.0 scheme is awaited, management emphasized that its growth plans are not contingent solely on government policy. The company has remained selective in bidding for tenders, particularly where working capital intensity is high, reflecting its focus on capital efficiency.

* Solar rooftop installations offer better unit economics and a more favorable working capital cycle compared to pumps, with margin profiles expected to be higher than company-level EBIT margins. Strategically, CROMPTON continues to operate under an asset-light outsourcing model, with installation outsourced and no plans for backward integration.

Foray into high-TAM residential wires with a focus on capital efficiency

* CROMPTON’s entry into retail wires follows a detailed evaluation of multiple adjacent categories, including white goods and cables. Given its strong brand equity and distribution network in the B2C segment, retail wires emerged as a natural adjacency with a large addressable market. While the wires market is crowded and margins could initially act as a drag, the company aims to build a differentiated portfolio centered around product innovation and customer problem-solving.

* The company’s focus remains firmly on the B2C retail segment, leveraging brand recall and initially adopting an outsourced supply model. It aspires to achieve high single-digit EBIT margins in this segment while maintaining disciplined RoCE.

* Geographically, Tamil Nadu and Karnataka will serve as the initial focus markets, enabling the company to refine execution before scaling nationally. While nearterm profitability may remain modest, the company believes that volume growth and brand leverage can gradually offset margin pressures.

Valuation and view

* Over the years, CROMPTON has established itself as a strong player in various consumer electrical categories, including fans, lighting, residential pumps, and domestic appliances. The company is a market leader in the fan segment, with ~25% market share, and the residential pumps segment, with ~30% market share. It is also among the top three companies in the lighting segment and among the top five in consumer appliances. BGAL’s acquisition has helped CROMPTON reinforce its product offerings in small domestic appliances.

* We expect CROMPTON to report ~8% revenue CAGR over FY26-28. Revenue CAGRs across key segments are estimated as follows: ECD (8%), Lighting (6%), and BGAL (10%). We estimate gross margin to expand over FY27-28, led by the company’s pricing strategies, product premiumization, and cost-efficiency measures. We estimate an EBITDA/PAT CAGR of 14%/17% over FY26-28 and an EBITDA margin of 10.4%/11.2% in FY27/FY28 vs. 10.2% in FY26 (avg. 12.3% over FY21-25).

* We believe that higher investments in advertisement and promotional spending, along with efforts to improve brand strength and product portfolio, will bolster the company’s future growth trajectory. CROMPTON trades at 29x/24x FY27E/FY28E EPS. We reiterate our BUY rating with a TP of INR350, based on 33x FY28E EPS.

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