Emkay Global Financial has given Buy recommendation for Crompton Greaves CE with a target price of Rs. 435 in its research report issued on Jul 25, 2022
Emkay Global Financial’s report on Crompton Greaves CE
Q1FY23 standalone revenues came in 6% below our estimates, with ECD/Lighting missing by 5%/12%. Despite commodity headwinds, standalone GM expanded by 100bps qoq to 30.7%. (Note that consolidated numbers include first full quarter of Butterfly consolidation.) Volume growth (ex-pumps) was 5% on a 3-yr CAGR basis, partially impacted by the inflationary scenario. Higher employee costs, including non-recurring items, suppressed EBITDA. Butterfly had surprised positively on revenue growth and operational fronts. The company has entered into the built-in kitchen appliances category to further strengthen its presence in the kitchen products space after the acquisition of Butterfly. It aims to achieve No. 3 position in Chimney+Hobs within three years.
We have raised FY23-25 revenue/EBITDA estimates by 1-2% as we incorporate category expansion. However, higher depreciation charge has led to 1-6% EPS cut over the same period. Retain Buy with an unchanged TP of Rs435 (Jun’23E).