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:

Maintain BUY on Federal Bank - Challenges more than factored in - HDFC Securities

Maintain BUY on Max Financial - Worst is behind - HDFC Securities

Maintain REDUCE on Dabur - Weak performance, Share gain continues - HDFC Securities

Maintain ADD on Sun Pharma - Specialty scale up delayed - HDFC Securities

Stock Recommendation - Supreme Industries - Accumulate - Geojit

Downgrade to ADD on Aditya Birla Fashion and Retail - Growth gets dearer; Leverage could bite! - HDFC Securities

Maintain ADD on Torrent Pharma - Stable performance, Resilient outlook - HDFC Securities

Analysis on ITC acquiring 100% equity stake in Sunrise Foods Pvt Ltd - HDFC Securities

Maintain ADD on Trent - Savings in Cost of Retailing > GM dilution - HDFC Securities

Maintain SELL on Avenue Supermarts - Un-DMARTesque! - HDFC Securities

Maintain ADD on DCB Bank - Attractive amidst visible headwinds - HDFC Securities

Maintain ADD on Colgate Palmolive - Muted Q4, signs of improving execution - HDFC Securities

Maintain BUY on JMC Projects - Long wait - HDFC Securities

Maintain BUY on JK Lakshmi Cement - Strong margin uptick; Healthy balance sheet - HDFC Securities

Maintain BUY on Kalpataru Power Transmission - Multiple triggers - HDFC Securities

Maintain ADD on BSE - Fighting back, cash support - HDFC Securities

Colgate Palmolive Q4FY20 Result First Cut - Miss on all fronts - HDFC Securities

Maintain ADD on L&T Infotech - Q4FY20 Results Review - HDFC Securities

Maintain Reduce on Dr. Reddy's Labs - Valuations leave little room for disappointment - HDFC Securities

Maintain BUY on UltraTech Cement - Robust margin and leverage performance - HDFC Securities

Maintain BUY on CDSL - Robust performance continues - HDFC Securities

Downgrade to REDUCE on Jubilant FoodWorks - Good franchise, a pause before run - HDFC Securities

ADD on Bajaj Auto - Resilient margins - HDFC Securities

RIL Right's Issue - Mr. Jyoti Roy, DVP Equity Strategist, Angel Broking Ltd

First Cut Analysis: BUY on UltraTech - Healthy results despite Covid impact - HDFC Securities

BUY on Escorts - Strengthening the core - HDFC Securities

Maintain ADD on Zensar Technologies - Elusive quest for growth - HDFC Securities

Retain BUY on Nippon Life India Asset Management - Strong core despite market share loss! - HDFC Securities

Maintain ADD on L&T Technology Services - Enduring the ebbs and flows - HDFC Securities

Maintain Buy on Cipla - Positive outlook reaffirmed - HDFC Securities

Maintain BUY on Mahindra & Mahindra Financial Services - Pain inevitable, valuations attractive - HDFC Securities

Maintain SELL on ABB India - Long road to recovery - HDFC Securities

Maintain ADD on Mphasis - Positives outweigh the risks - HDFC Securities

Maintain REDUCE on Siemens - Headwinds remain - HDFC Securities

Maintain ADD on Havells - Recovery Interrupted by Covid - HDFC Securities

ADD on Kotak Mahindra Bank - Stronger than most, but expensive - HDFC Securities

Maintain REDUCE on Godrej Consumers - Weakness continues, exacerbated by Covid - HDFC Securities Institutional Research Desk

First Cut Analysis: Maruti Suzuki India Ltd Q4FY20 Results - HDFC Securities

Vedanta Limited - Voluntary Delisting Proposal - Angel Broking

Shree Cement - Strong show; Valuations remain expensive - Q4FY20 Result Review - HDFC Securities

ICICI Securities - Strong Quarter - Q4FY20 Result Review - HDFC Securities

Cyient - Crash landing - Q4FY20 Result Review - HDFC Securities

ICICI Bank - Well placed for a bumpy ride - Q4FY20 Result Review - HDFC Securities

RBL Bank - Risks to play out - Q4FY20 Result Review - HDFC Securities

Persistent Systems - Growth dichotomy - Q4FY20 Result Review - HDFC Securities

SBI Life Insurance - Challenging Year Ahead - Q4FY20 Result Review - HDFC Securities

Marico - Saffola saves the day - Q4FY20 Result Review - HDFC Securities

AU Small Finance Bank - Better placed vs. peers - Q4FY20 Result Review - HDFC Securities

Reliance Industries - A weak quarter but better visibility on Balance Sheet improvement - Result Review - HDFC Securities

ICICI Lombard - Uncertain times ahead - 4QFY20 Result Review - HDFC Securities







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

disclaimer copyright © 2005 - 2019