India's Crompton Greaves misses quarterly profit view on soft demand for electrical goods
India's Crompton Greaves Consumer Electricals reported a smaller-than-expected rise in quarterly profit on Wednesday due to sluggish demand in its mainstay electric durables segment that sells fans and pumps.
Consolidated net profit increased 27.7% to 1.10 billion rupees ($12.7 million) in the quarter, but fell short of analysts' average estimate of 1.15 billion rupees, according to data compiled by LSEG.
Revenue from operations climbed 4.5% to 17.7 billion rupees, but the growth slowed from 6.4% in the previous quarter.
The electric consumer durables (ECD) segment - which makes up about 73% of Crompton's overall revenue - reported a 6% year-on-year increase in revenue, compared to the 19% growth a year ago.
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KEY CONTEXT
Crompton has consistently raised prices of products in the ECD business, with the increase more than the industry average, analysts have said. The segment, which has seen double-digit percentage growth year-on-year in the past few quarters, reported mid-single-digit growth in the quarter. It comes amidst a broader decline in urban consumption in India.
However, results in its smaller and weaker Butterfly segment, which sells kitchen appliances improved. Revenue, which had declined on a year-on-year basis for the past few quarters, remained stable, as demand for premium products improved. Profit after tax was at 80 million rupees, compared to a loss of 20 million rupees last year.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts' sentiment
months) months)
RIC PE EV/EBIT Price/S Revenue Profit Mean # of Stock to Div yield
DA ales growth(%) growth(%) rating* analysts price (%)
target**
Crompton Greaves 31.90 21.62 2.40 12.46 25.83 Buy 32 0.73 0.86
Havells India 56.03 37.83 4.15 14.94 23.52 Buy 24 0.87 0.63
Bajaj Electricals 42.76 20.07 11.24 67.68 Hold 9 0.87 0.42
Voltas 42.50 33.19 2.31 15.13 31.62 Buy 33 0.88 0.40
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT
OCTOBER TO DECEMBER STOCK PERFORMANCE
-- All data from LSEG -- $1 = 86.8560 Indian rupees
