HDFC Securities' research report on Crompton Consumer
Crompton continued its strong run in 3QFY21 as revenue/EBITDA grew by 26/46% YoY (HSIE 19/32%). ECD saw 32% YoY broad-based growth, as Fans/Pumps/Geysers posted 36/19/49% YoY growth. Crompton saw market share gains across its portfolio, share gain in fans by 1% YoY. Lighting sustained recovery, B-C clocked 13% volume growth while B-B remained a laggard. Consistent focus on distribution reach (mainly in rural), cost optimisation, and product innovation is driving overall performance. EBITDA margin was up >200bps YoY despite RM inflation, as cost control, product mix, and oplev supported margin.
Outlook
We expect earnings momentum to sustain in the coming quarters too. We increase EPS by 6/4% for FY22/23. We value Crompton at 40x P/E on Mar23E EPS to derive a TP of Rs 460. Maintain BUY.
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