Crompton Greaves Q4 Results Review - Consistent Strong ECD Performance: Dolat Capital

Dolat Capital Report

Crompton Greaves Consumer Electricals Ltd.’s Q4 FY24 revenue was in-line, while profitability exceeded estimates. Revenue increased 9.5%, led by 14% growth in electronic consumer durable segment. Lighting was flat, while Butterfly Gandhimati Appliances Ltd. declined 12%. With strong summer offtake, fans exhibited strong volume-led growth of 13% on a normal base, which was encouraging.

Ebitdam contracted 140 bps to 10.4% due to high brand investments and extended producer responsibility impact. Excluding EPR, margins stood at 11.1%.

We expect margins to recover with price increases, higher share of premium products across categories, cost control measures and better operating leverage. We are hopeful that strong summer demand for fans will continue in Q1 FY25.

Also, LED pricesto bottom out in next few months and lighting revenue to grow on a favorable base.

We believe Crompton Greaves is well placed to benefit from-

1. its leadership position in core categories,

2. strong distribution network,

3. premiumization and

4. continuous innovation.

We build in revenue/profit after tax compound annual growth rate of 14%/29% over FY24-26E and lower our FY25E/26E EPS estimates by 3%/2% to Rs 9.0/11.5 resp. Maintain ‘Buy’ rating with target price of Rs 394 (34 times FY26E EPS).

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