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Stock Of The Day: Crompton Greaves Stock Surges After Profit Beat — Key Levels, Analyst Views

Here is all you need to know about the company's Q4 results and the ensuring analysts view.

<div class="paragraphs"><p>Crompton Greaves’ products on display. (Source: NDTV Profit)</p></div>
Crompton Greaves’ products on display. (Source: NDTV Profit)
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Shares of Crompton Greaves Consumer Electricals Ltd. surged 17.6% on Friday after its fourth-quarter profit beat analysts' estimates.

The electrical equipment maker's net profit rose marginally to Rs 133 crore in the quarter ended March 2024, according to an exchange filing. That compares with the Rs 121-crore consensus estimates of analysts polled by Bloomberg.

The stock was trading 15.9% higher at Rs 392.45 apiece on the NSE, compared to a 0.45% rise in the benchmark S&P BSE Sensex at 11:55 a.m.

Crompton Greaves Q4 Result Highlights (Consolidated, YoY)

  • Revenue up 9.5% at Rs 1,961 crore. (Bloomberg estimate: Rs 1,953 crore).

  • Ebitda down 3.7% at Rs 204 crore. (Bloomberg estimate: Rs 196 crore).

  • Margins expanded 142 bps at 10.4%. (Bloomberg estimate: 10%).

  • Net profit up 1.4% at Rs 133 crore. (Bloomberg estimate: Rs 121 crore).

  • The board has recommended a final dividend of Rs 3 per equity share.

Key Levels To Watch

  • Support level: Rs 318 per share (three-week low).

  • Resistance level: Rs 398.8 apiece (lifetime high).

Key Highlights

In the fiscal 2023-24, Crompton Greaves sold over two crore fans, setting a record high sales volume.

Streetlight and industrial segments are leading the growth in the B2B business, which is driving the company's lighting business growth and improving margins. The B2C business is still experiencing a decline in battery and lamp prices.

E-commerce led the 31% year-over-year growth in the quarter-ended March for alternative channels, which continue to be a growth driver.

Pricing actions, premiumisation and mix improvement have resulted in margin improvement. The company has implemented three price hikes in second-half of fiscal 2024, and the management is anticipating an additional increase in the near future.

Key Conference Call Takeaways

Crompton Greaves expects to maintain its positive outlook with measured price increases across its product range. The demand outlook is expected to remain robust despite some rains in the last few days, it said.

The company is moving on from its failed merger with Butterfly and strengthening the management team at Butterfly instead.

The management has guided for Rs 800-1,000 crore of capex for the ongoing financial year, primarily for capacity expansion and product innovation.

Butterfly's performance is expected to improve from June onwards. Crompton is optimistic about delivering double-digit margins from this segment in the long term.

Brokerage Views

Nuvama has retained a 'buy' on Crompton Greaves, with the target price raised to Rs 393 from Rs 365 earlier, implying a 16% potential upside. The electronic consumer durables segment is doing well, with the B2B lighting business remaining strong, it said.

The focus is on improving Butterfly's performance, which is likely to recover from June onwards. Crompton is focusing on product innovation in the ECD segment. Additionally, Crompton 2.0 remains intact, with sustainable performance ahead, Nuvama said.

Kotak Institutional has an 'add' rating on Crompton Greaves, with a target price raised to Rs 350 from Rs 300 earlier, implying a 3.5% potential upside. It notes that ECD margins topped expectations amid seasonal strength, but Butterfly observed a large loss on one-time impacts.

The company's near-term outlook is positive, as summer demand remains strong. Butterfly’s numbers are expected to trend up year-on-year, starting in June, as the company completes the rationalisation of its channel mix.

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