Crompton Consumer - Q1 FY22 results first cut - YES Securities

ECD delivers inline performance, while lighting disappoints

- Result summary - Crompton has delivered lower than expected results with lighting segments disappointing, while ECD delivered inline growth. Revenue/EBITDA/PAT grew 46%/44%/47% respectively on favorable base.

- Topline - Revenue grew 46% yoy, with ECD growing at 48.3% (in line with expectations) and lighting business remaining subdued with 34.4% growth. Strong growth momentum from Q4 continued in April, however second wave impacted performance from last week of April and May was virtually washout. Business recovery began from early June with easing of restrictions. Fans growth was driven by strong performance in Premium & Decorative Segment. Market share increased in Fans. Pumps growth was driven by residential pumps. Appliances business continued to deliver strong growth based on excellent consumer offerings of core categories viz. Coolers, Geysers and Mixer Grinders. Lighting business continued to deliver double digit EBIT margins.

- Margins - Gross margins contracted 104bps yoy to 31.5% on commodity cost pressure, while EBITDA margin contracted by 22bps on cost reduction initiatives.

- Business segments - ECD segment delivered strong growth across categories and geographies. B2C LED lighting business maintained its upward growth trajectory.

- Near-term outlook - 1HFY22 could pose challenges on back of lockdowns/restrictions across various part of the country, company believes growth strong momentum should continue in 2HFY22 as Covid situation normalizes.

- Our view - The stock is currently trading at 41x FY23E P/E and 32x EV/EBITDA. We remain positive on the stock and have BUY rating with TP of Rs498. Crompton trades at discount to Havells which should gradually reduce in our view as the company has now started to deliver consistent revenue growth and margin expansion and has better return ratio than peers.

Shares of Crompton Greaves Consumer Electricals Ltd was last trading in BSE at Rs. 471.6 as compared to the previous close of Rs. 467.75. The total number of shares traded during the day was 23994 in over 1199 trades.

The stock hit an intraday high of Rs. 474.9 and intraday low of 467.75. The net turnover during the day was Rs. 11311388.

Source : Equity Bulls

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