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3Q investor call takeaways - Crompton Consumer - YES Securities

Posted On: 2021-01-27 09:03:58 (Time Zone: Arizona, USA)

Demand outlook remains positive; commodity price inflation is expected to impact margin in near term

Our View - The stock should continue to outperform the industry, Crompton is best placed to counter commodity price inflation as it has cost leadership which coupled with price increase and cost reduction can bring back industry leading growth without any meaningful margin contraction. We expect Crompton to sail though this challenging period and gain further market share. We continue to remain positive on the stock given it is trading at discount to peers with better return ratios.

ECD - ECD has seen industry leading growth, with Fans growing at 36%, with premium Fans growing at 51% and super premium fans showing good traction. Have gained 1% market share in Fans on rolling basis. Pumps has seen 19% growth with residential pumps growing at 22% in volume terms and 25% in value terms. Appliances has seen 45% with Geysers has seen 49% growth and moving towards the leadership position. Sold around 1.25lakh geyser in Q3. Mixer grinder has seen exponential growth.

Lighting - Lighting B2C LED volume growth has been 13% so has been the value growth. Conventional lighting has declined 17% and now contributes only 15% to the lighting revenue. On the margin front have now reached double digit and is likely to sustain. Price erosion has been behind the industry now.

Commodity inflation - Commodity inflation continues to pose some headwinds and would pose challenges in Q4 as well. To offset commodity price inflation have taken price increase of 5-8% across product categories.

Shares of Crompton Greaves Consumer Electricals Ltd was last trading in BSE at Rs.428.8 as compared to the previous close of Rs. 411.75. The total number of shares traded during the day was 38512 in over 1715 trades.

The stock hit an intraday high of Rs. 439 and intraday low of 400.95. The net turnover during the day was Rs. 16050106.

Source: Equity Bulls

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