Target: ₹325

CMP: ₹290.15

Crompton Greaves Consumer Electricals standalone revenue grew 15 per cent y-o-y to ₹1,460 crore in Q3-FY24 at a three-year CAGR of 3 per cent. It was 6 per cent ahead of our estimates, driven by new product launches and demand uptick.

Segment-wise, revenue from electrical consumer durables increased 19 per cent y-o-y vs Havells’ 3 per cent, and V-Guard’s 11 per cent. Lighting (17 per cent) reverted after a series of subdued quarters, with 1 per cent y-o-y growth vs Havells’ 2 per cent. Alternate channels delivered robust growth of 38 per cent (eCommerce revenue doubled in Q3).

We have incorporated Butterfly Gandhimathi’s (BGAM) financials into Crompton. We lower our EPS by 7 per cent for FY24E and 4 per cent for FY25 on delay in Butterfly breakeven and continued ad expenses dragging margin. However, we raise our TP to ₹325 from ₹315 on 28x (unchanged) December 2025E P/E as we roll forward by a quarter.

With improved demand, there is a possibility of rerating as Crompton has a strong brand recall, industry-leading EBITDA margin, EPS-accretive acquisition of BGAM, and the go-to-market strategy. We expect an earnings CAGR of 17 per cent during FY23-26, with an average ROE and ROCE of 30 and 28 per cent respectively, during FY24-26.