Crompton Greaves Q3 Results Review - Growth, Margin Uptick Key Stock Price Triggers: Systematix

Systematix Research Report

Crompton Greaves Consumer Electricals Ltd.’s Q3 result was significantly below our estimates due to muted performance in all segments. Surprisingly, the company chose to focus on selling star-rated brushless direct current fans, unlike peers, over liquidating its non star inventory through heavy discounting.

Muted growth in mixers and wet grinders impacted the Butterfly Gandhmathi Appliances Ltd. business. A decline in conventional category and intense competition in business-to-consumer LED hurt the lighting segment.

A revamped portfolio should drive traction in pumps, in our view.

Despite healthy gross margin (32.5%, up 86 bps YoY and 39 bps QoQ), Ebitda margin was restricted at 10.1% (down 424 bps YoY and 131 bps QoQ), as the company continued to invest in brand building, people, innovation and research and development.

Further impact came from additional support to channels amid the intense competition. A weak Q3 has led us to cut earnings by ~10% each year till FY25E.

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