Crompton Greaves - Butterfly Gandhimathi To Be A Near-Term Drag: HDFC Securities

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..HDFC Securities Institutional Equities.We met the management of Crompton Greaves Consumer Electricals Ltd. which reiterated its commitment to an absolute profit-led growth mindset. The summer season has started on a positive note and Crompton has taken a 4-5% price hike in fans (cumulatively over the last few months) which has helped recoup all but 150 bps cost increase (BEE rating change led). In the medium term, fans are poised for double-digit growth, led by-an increasing premium mix (25% versus industry average of 40%);a shift from unorganised to organized (BEE rating change every two years); and focus on scaling up the non-ceiling portfolio. Other ECD products (pumps, SDA and LKA) are showing promising trajectories. In lighting, price erosion intensity has reduced and it is expected to be MSD-to HSD in FY25. Butterfly Gandhimathi Appliances Ltd. channel correction is a WIP (away from ecom/corporate/OMC in favour of retail) and will continue to impact earnings for two more quarters. .In the medium to long term, we like the Crompton 2.0 strategy, where the focus is on -protecting and growing the core (fans and pumps);scaling up the kitchen portfolio (both SDA and LKA) as the new vector for growth;transforming the lighting business;premiumisation of the portfolio, led by innovation; go-to-market excellence and diversification; andentry into two-three new segments. We believe the sustained execution of the Crompton 2.0 strategy and industry outperformance can help rerate the stock. We cut our FY24-26 earnings by 2-4%, largely on account of Butterfly Gandhimathi. We roll forward to 35 times FY26 earnings per share to arrive at a target price of Rs 380. Maintain Buy..Click on the attachment to read the full report:.CreditAccess Grameen - Best Placed Among Peers; Dominance To Sustain: Motilal Oswal.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Crompton Greaves - Butterfly Gandhimathi To Be A Near-Term Drag: HDFC Securities

We believe the sustained execution of the Crompton 2.0 strategy and industry outperformance can help rerate the stock.

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