Prabhudas Lilladher has given Buy recommendation for Crompton Greaves Consumer Electricals with a target price of Rs. 505 in its research report issued on Jul 26, 2022

Prabhudas Lilladher’s research report on Crompton Greaves Consumer Electricals

We cut our FY23/24 earnings by 11%/ 6% to mainly reflect our trimmed margin expectations. Management highlighted that correction in commodities will be positive for demand, going forward. Crompton remains confident of achieving success in Kitchen appliances segment which will be key re-rating trigger going forward, in our view. Despite unprecedented RM inflation, Crompton has maintained the structural profitability of business and is confident of sustaining it through 1) pricing actions 2) improving business mix 3) cost saving program and 4) advance booking of key RM. We remain structurally positive on CROMPTON for longer term given 1) market share gains across core categories of Fans, Pumps and LED lights 2) sustained investments in LT initiatives (brand building, GTM, innovation, business processes & teams 3) well defined plan of entering and scaling up new categories (Water Heaters, Air Coolers, Mixer-Grinders and Kitchen appliances) and 4) strong balance sheet.

Outlook

We estimate 18% PAT CAGR over FY22-24 and assign a target price of Rs505 @ 40xMarch24 EPS (Rs534 earlier). Maintain BUY .

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