Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Maintain ADD on Crompton Consumer - Q4FY20 Results Review - HDFC Securities

Posted On: 2020-05-19 19:45:59


Crompton Consumer (Q4FY20): Resilient show as Covid halts recovery. Maintain ADD
(TP Rs 221, CMP Rs 199, MCap Rs 125bn)

Crompton's performance in 4QFY20 saw a strong start as the co registered 14% yoy growth in its net revenues in Jan/Feb 2020. ECD clocked 18% in Jan/Feb while Lighting was at 4%. Fans, Appliances and domestic pumps registered volume growth of 21%, 48% and 19%. Covid led lockdown impacted the quarter adversely as co missed out on sales during the last 10-15 days of March (~25% of revenue mix for the quarter). However, compared to its peers, Crompton's performance was resilient. Decline of 14% yoy in ECD was in-line with Havells while the decline of 19% yoy in Lighting was better than the 31% yoy decline reported by Havells. We believe Crompton's business is more essential than discretionary as Fan/Lighting/Pumps are need based. Thereby, revenue loss due to lockdown will be limited than its peers. Owing to continued extension of lockdown and weakness in demand, we cut our EPS estimates 6/3% for FY21/FY22 (22/21% cut in our 4QFY20 Preview). We value Crompton at 30x on Mar-22E EPS, deriving a TP of Rs 221. Maintain ADD.

Strong growth pre-Covid: Net revenue saw contraction of 16% yoy (exp of 6% dip) to Rs 10.1bn (+7% in 4QFY19 and +4% in 3QFY20). ECD/Lighting revenues saw decline of 14/19% yoy. However, Jan/Feb saw healthy 14% yoy growth led by 18% growth in ECD. Fan continues to gain market share (1% up yoy). Lighting too saw return to growth and clocked 4% growth in Jan/Feb. Overall volume growth was 33% yoy in Jan/Feb. Co is focusing on product innovation to drive growth and market share.

Margins resilient: GM expanded by 67bps yoy to 31.6% (-64bps 4QFY19, +21bps 3QFY19). Employee/other expenses decreased by 8/12%. EBITDAM was down by 37bps yoy to 13.6% (exp 12.8%). EBITDA saw a decline of 18% yoy (exp dip of 15%). ECD EBIT margins expanded by 51bps yoy to 20%. Lighting margin remained under pressure, and declined by 450bps to 7%. Co plans to cut down cost by Rs 1bn in FY21 to support margins.

Call & other takeaways: (1) Co's plants are now operational and functioning at 25-30% of capacity, (2) Overall 40-50% of retail touchpoints have reopened. Demand in these stores is at 60-70% of normal, (3) Trade inventory is normal, (4) Co has 1 month inventory despite production loss, no supply side constraints, (5) Fans and Pumps have seen revival in demand in May, (6) Production improvement will continue, (7) Co's liquidity remains strong with Rs 5.85bn of cash. Additionally, co also has board approval for raising Rs 3bn via NCDs.

Maintain ADD: Consistent outperformance in ECD, price increase in B-C lighting and stock correction of 30% in the last 3 months keeps us interested in the story. We maintain ADD rating.

Shares of Crompton Greaves Consumer Electricals Ltd was last trading in BSE at Rs.202 as compared to the previous close of Rs. 198.3. The total number of shares traded during the day was 312107 in over 687 trades.

The stock hit an intraday high of Rs. 206.6 and intraday low of 199.85. The net turnover during the day was Rs. 63222152.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.





Other Headlines:

Preview on RBI Monetary Policy - December 2020 - Shanti Ekambaram, Group President - Consumer Banking, Kotak Mahindra Bank

10 things you should know about Burger King India Limited

Views of HDFC Securities and Acuité Ratings & Research on Q2FY21 GDP Numbers

Rollover Report for November 2020 - December 2020: Angel Broking

Initiating Coverage on Godrej Properties - The housing factory - HDFC Securities

Burger King IPO - Angel Broking

Rollover Analysis - Record foreign inflows pushes Nifty to 13k - YES Securities

Ceramic tiles industry - Market share gains sustain for top branded players - ICICI Securities

Gas sector - CGD: Competition to hit margins, volumes and lead to derating - ICICI Securities

Cement - Prices resilient in Q3; consensus upgrades to continue - ICICI Securities

Specialty chemicals - Price trend in Sep-20 - ICICI Securities

Timken India - Q2FY21 Company Update - ICICI Direct

Upgrade in target price of IDFC First Bank - Angel Broking

Laurus Labs stake acquisition in Richore Lifesciences - Angel Broking

Shares of Lakshmi Vilas Bank (LVB) suspended from trading - Angel Broking

Initiating Coverage on Sundram Fasteners - Fastening growth - HDFC Securities

Astral Poly Technik - Scalability to further improve with storage tanks foray - ICICI Securities

Vardhman Special Steel - Q2FY21 Company Update - ICICI Direct

Initiating Coverage - Advanced Enzyme Technologies - ICICI Direct

L&T - Secures Large Contract - Nov 25, 2020 - Angel Broking

Alembic Pharmaceuticals - Tentative Approval for JV - Angel Broking

Drug launch by Lupin - Tacrolimus Capsules - Angel Broking

Gujarat Gas - Nov 25, 2020 - Angel Broking

Metropolis Healthcare - Nov 25, 2020 - Angel Broking

NTPC - Showcase of strength & competitiveness - ICICI Securities

Telecom - Market Share TRACKER - Bharti is narrowing the gap on incremental market share vs RJio - ICICI Securities

Cochin Shipyard - Q2FY21 Result Update - ICICI Direct

Engineers India - Q2FY21 Result Update - ICICI Direct

Rupee - Nov 24, 2020 - Reliance Securities

FMCG Sector Update - Recovery unlocked; lower growth divergence - HDFC Securities

Engineers India - Consultancy segment outperformance - ICICI Securities

Engineers India - Q2 FY21 Result Update - YES SECURITIES

Motherson Sumi Systems - Company Update - Virtual Investor Conference - ICICI Direct

Mutual Fund Review - November, 2020 - ICICI Direct

Sadbhav Engineering - Q2FY21 Company Update - ICICI Direct

IRB Infrastructure - Q2FY21 Company Update - ICICI Direct

Vodafone Idea fund raising - Angel Broking

Rupee - Nov 23, 2020 - Reliance Securities

Crude Oil - Nov 23, 2020 - Reliance Securities

Q2FY21 Bank Result Quick Review - Angel Broking

Banks & NBFC's Sector Update Report - Yet another watershed moment? - HDFC Securities

Galaxy Surfactants - EBITDA/kg has an upside risk - ICICI Securities

Diagnostics - COVID-19 tests continue to trend higher - ICICI Securities

Banking & Financial Services - Sector Update - Nov 22, 2020 - ICICI Direct

Dalmia Bharat Sugar - Q2FY21 Company Update - ICICI Direct

Balkrishna Industries - Industry export growth momentum continues - ICICI Securities

Covid Recovery Pulse - Festive positivity continues in auto retails, E-way bill generation improves... - ICICI Direct

Quant Pick - Exide Industries - ICICI Direct

Shankara Building Products - Q2FY21 Company Update - ICICI Direct

Triveni Engineering - Q2FY21 Company Update - ICICI Direct



Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019