Crompton Greaves Consumer Electricals Q3 concall –
Sales – 1516 cr vs 1411 cr ( including revenues from Butterfly acquisition )
EBITDA – 152 vs 202 cr, Margins at 10 vs 14 pc
Net Profit – 88 vs 148 cr
New BEE energy norms being implemented for fans wef 01 Jan
Company didn’t load the channel with old / lower cost inventory by producing more of non compliant fans
Hence fans category degrew in Q3
Have started loading channel with BEE compliant fans web early Jan
Wrt Pumps, have taken price cuts to be competitively placed in the Mkt
Also, revamped entire range of pumps
Small appliances business growing robustly. Having an yearly run rate of 1000 cr. Has achieved significant scale. This,without counting Butterfly business
Making aggressive investments in R&D, marketing, training and large appliance business
Higher interest cost ( against borrowings for Butterfly acquisition ) also hitting P&L
Have revamped 400 retail stores wrt touch and feel iro Crompton products. Will do the same for another 1100 stores next yr
Rural and E-commerce grew strongly even in this weak qtr
Butterfly sales grew marginally in Q4 when most kitchen appliance players have shown de-growth. Butterfly integration progressing well
As the topline starts to grow, Margins likely to bounce back to historical levels
Lighting business also had a tough Qtr
B2C part of lighting business likely to bounce back faster than B2B part. Have underachieved in the lighting space in last 3 yrs. Management taking steps to correct the same
Kitchen appliance with Butterfly integration should be a high growth area for the company
Crompton + Butterfly is now one of the largest player in Kitchen appliance space @ 2000cr annual sales ( only behind TTK prestige …imo )
Large appliances currently have a small base in Crompton’s business. But this can be a fast growing large category over long term
Real Estate mkt picking up. But the fans are one of the last things to be installed. So there is a gap of about 48 months or so before RE pick up and surge in Fans demand. That makes company optimistic going fwd
Disc: holding, biased
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