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Equirus Securities
Crompton Consumer (Long)
Target: ₹353
CMP: ₹300.80
Crompton Greaves Consumerhas reported a better-than-expected operational performance for Q2-FY21, with revenues/EBITDA coming in at ₹1,200 crore/₹190 crore, up 11 per cent/44 per cent y-o-y.
EBIDTA margin at 15.5 per cent expanded by a whopping 347 bps y-o-y – a key highlight of Q2.
Revenues for ECD/lighting products grew 18per cent and negative 7 per cent to ₹930 crore and ₹270 crore respectively, while margins expanded 182bps/512bps y-o-y to 21 per cent/10.4 per cent.
We believe CG’s Q2 operational performance validates our earlier argument that demand recovery is likely to be faster for electrical categories than for white goods. Besides, Q2 performance showcases the company’s strong market position in the industry and its ability to deliver a robust performance amidst the toughest of conditions.
We remain positive on India’s electrical space and believe CG is well placed to deliver an all-round performance during FY22. We continue to like the electrical space with CG as one of our top picks. We therefore maintain Long on the stock with a March 2022 target price of ₹353 (September’21 TP of ₹283 earlier) set at 35x on TTM EPS of ₹10.1.
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