Crompton Consumer - Q4 FY21 first cut - YES Securities

Results significantly ahead of estimates; ECD delivers stellar revenue growth

Result summary - Crompton has delivered better than expected results with ECD delivering stellar growth . Revenue/EBITDA grew 48%/61%, while reported PAT grew by 144% yoy as there is net tax write-back of Rs181mn during the quarter, adjusting for tax write back PAT growth stood at 69%.

Topline - Revenue grew 48% yoy, ECD continues to shine with growth of 61% yoy with continued strong performance across channels and product categories. The fans business continued to grow market share

While appliances business registered industry leading growth driven by strong performance in water heaters, air coolers and kitchen appliances. Lighting Segment delivered growth of 15.4% which was lower than estimates as B2B lighting activity continues to be challenged due to slow order pick-up from institutional and government entities. B2C lighting continues to improve growth trend.

Margins - Gross margins contracted 81bps yoy to 30.8% on high commodity inflation, while EBITDA margin improved 122bps on cost reduction initiatives.

Channel development - Alternate channels viz. E-com, MOR and Rural increased their contribution to the overall business.

Near-term outlook - 1HFY22 could pose challenges on back of lockdowns/restrictions across various part of the country, company believes growth strong momentum should continue in 2HFY22 as Covid situation normalizes.

Our view - The stock is currently trading at 35x FY23E P/E and 27x EV/EBITDA. We remain positive on the stock and have BUY rating with TP of Rs498. Crompton trades at ~25% discount to Havells which should gradually reduce in our view as the company has now started to deliver consistent revenue growth and margin expansion and has better return ratio than peers.

Shares of Crompton Greaves Consumer Electricals Ltd was last trading in BSE at Rs.397.9 as compared to the previous close of Rs. 388.8. The total number of shares traded during the day was 271687 in over 6223 trades.

The stock hit an intraday high of Rs. 415.75 and intraday low of 394. The net turnover during the day was Rs. 108782898.

Source : Equity Bulls

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