Started reading about this recently. Quick notes:
Good business run by professional management although no promoter with skin in the game.
Market leader in ceiling fans and pumps. Aiming to premiumize their product offerings and some initiatives (Project Unnati) underway to improve revenue and profitability.
Stake in butterfly and can scale kitchenware products pan India. Although proposed merger didn’t take place operational synergies aren’t impacted.
Last few quarters didn’t have great results due to regulations (star ratings for fans) and advertising spends.
Available at reasonable valuations compared to industry peers. I feel residential real estate up cycle will show up in this sector with a lag and as such business demand will increase. (All new flat bookings will need electricals during occupancy.)
Recent investor call:
Crompton Q3 FY24 Earnings Call | Crompton Greaves Consumer Electricals Limited FY24 Q3 Concall
- Good growth on ECD – fans, pumps (agricultural too), geysers, etc. 2.0 is on track and premiumization theme working out well.
- Lighting too doing well having procured bulk some government orders. Stopped CFL business and moved to LED earlier so that’s also another reason for revenue decline.
- Butterfly sales showed decline due to corporate orders missing and they want to change channel strategy from such ad hoc model to more repeatable business. And scale the business from predominantly south player to pan India presence leveraging crompton network.
- Plan to use Butterfly manufacturing capacity for Crompton kitchen manufacturing. Should lead to better margins.
- In 2-3 quarters all increased spend on branding and re-channelling should start showing up in results.
Yes Securities report :
Yes_Securities_Crompton_Consumer_Q3FY24.pdf (354.2 KB)
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