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Motilal Oswal Report
Domestic brokerage firm Motilal Oswal has reiterated its Buy rating on Crompton Greaves Consumer Electricals Ltd. with a target price of Rs 340, based on 30 times FY28E earnings per share, implying a potenital upside of 35%, from the current market price of Rs 252.
The brokerage estimates Crompton to report ~13%/18%/21% in revenue/Ebitda/PAT CAGR over FY26-28 and estimates its operating profit margin to expand to ~11% by FY28 from ~10% in FY26.
The brokerage highlights that Crompton trades inexpensively at 27x/22x FY27E/FY28E EPS.
The brokerage also highlighted that in FY26, Cromptons' investments in research and development, advertising, and organisational capabilities weighed on overall OPM, while margins in Butterfly, Lighting, and ECD improved, supported by premiumisation.
The company is net cash positive, with a net cash balance of Rs 180 crore in FY26, and generated robust free cash flow of ~Rs 650 crore+ (annually over FY24-26).
Motilal Oswal believe higher investments in advertisement and promotional spending, along with efforts to strengthen the brand and product portfolio, will support the company's future growth trajectory.
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