Crompton Greaves Consumer Electricals –
Q1 FY 25 results and concall highlights –
Revenues – 2138 vs 1877 cr, up 14 pc
EBITDA – 232 vs 186 cr, up 24 pc (margins @ 11 vs 10 pc)
PAT – 152 vs 122 cr, up 24 pc
Company ( broadly ) has 3 lines of businesses – their legacy Electrical consumer durables business + Lighting business + acquired kitchen appliances business of Butterfly ltd ( acquired 1.5 yrs back )
Electrical consumer durables ( ECD ) business includes – Fans, Air Coolers, Geysers, Built in Home Alliances ( added recently – less than 2 yrs old ), Lighting products, Irons etc
Lighting business – selling LED downlights, LED tubes, Strips, LED COB lights etc
Butterfly – sells range of Kitchen appliances like – Juicers, Mixers, Grinders, Choppers, Electric Kettles, Gas Cooktops, Electric rice cookers etc
Segment wise performance –
ECD + Lighting business –
Sales @ 1959 cr ( 1727 cr from ECD, 233 cr from lighting ), up 18 pc YoY – highest ever sales, 4th consecutive Qtr of double digit revenue growth. ECD revenues grew by 21 pc. Lighting revenues grew by 2 pc
EBIT @ 280 cr ( 259 cr from ECD, 21 cr from lighting division )
EBIT margins @ 10.4 pc ( ECD EBIT margins @ 15 pc, Lighting EBIT margins @ 8.9 pc )
Company continued to aggressively expand its distribution channel. E-Commerce Chanel also grew at a brisk pace
Company’s spend on A&P increased by 29 pc !!! ( quite a big jump )
Butterfly –
Revenues @ 182 cr
EBIT @ 3 cr
Company is taking several initiatives to strengthen business fundamentals – turning around the Butterfly brand is a key priority
New products contributed to 8 pc of sales
ECD product wise growth –
Fans grew by 16 pc ( aided by extreme summers )
Pumps grew by 30 pc ( both agri and residential pumps grew smartly. Have recently forayed into solar pumps and executed orders worth 21 cr in the solar pumps category )
Large Appliance grew by 24 pc ( aided by 68 pc growth in Air coolers )
Small Appliance grew by 20 pc ( mainly led by Crompton branded Mixer Grinders )
In oder to sell large Kitchen appliances ( like built in Microwaves, Chimneys, Cooktops, Dish Washers etc ) under the Crompton brand, company has opened 100 Exclusive brand outlets ( EBOs). They recorded sales of 14 cr in Q1. Currently making losses at EBITDA level
Witnessing double digit growth in LED – tubes and ceiling lights ( however, prices of these products continue to correct )
Company’s newer channels grew @ brisk pace – E-Comm, Modern retail, rural sales grew by 82 pc, 22 pc and 16 pc respectively
La Niña – effect this year is also likely to result in harsher Winters – which again benefits the company’s sales of Geysers, room heaters
Company did take price hikes to combat higher material costs in Q1. Further hikes / cuts will depend on the trend of raw materials going fwd. Q1 was the fourth consecutive Qtr when company took price hikes ( copper, aluminium and steel prices have corrected somewhat in Q2 vs Q1 – further price hikes may not be required – IMHO )
Premiumisation – ie, selling better and more expensive products is a constant focus for the company in all its business divisions
Company has built a healthy order pipeline in its solar pumps business ( they did not disclose the amount )
Company is actively looking to enter 2-3 more product categories – that are complimentary to company’s line of business / current brand image. Will disclose the same when they r closer to launch
Company expects to start growing the Butterfly part of the business wef H2. At present ( and in Q1 ), taking a lot of steps in improving the business fundamentals, product pricing across channels right
In Q1, Butterfly part of the business spent 4 pc of sales on advertisement vs 2 pc in Q4 – showing increased aggression from the management
Company’s mkt share in the fans category is around 28-29 pc ( which is a big number ). Company sold 2 cr fans in FY 24. Out of these, around 24-25 pc of fans sold were in the premium category ( vs 16-17 pc about 3 yrs ago ). Aim is to take the premium part of the portfolio to 40 pc in next 4-5 yrs
In residential pumps, company is No 1 by mkt share in India. Now their focus is on Agri-pumps where the company is relatively under represented. Even in Solar pumps, there are expectations of higher growth going fwd
Company is among top 3 is Geysers and No 2 in Kitchen appliances ( after the acquisition of Butterfly ). Wef H2, company hopes to really accelerate their growth in the Kitchen segment
Company’s built in Kitchen appliances ( being sold through their EBOs ) is a start up. Company would first scale up the business to 100 cr / yr sales and only then start to focus on profitability
Lighting business ( both B2C and B2B ) is now back on growth path. Key now is to build on the gains made so far
Company had taken a debt of 2000 cr to acquire the Butterfly business. Today that debt stands at 300 cr ( they have knocked off 1700 cr of debt within 2 yrs ) – goes to show their strong cash generating abilities
Company is open to acquiring more brands – as one of the best usages of the cash that they generate. Helps them expand their addressable market
Disc: not holding, studying at present, inclined to add if there is more price correction in the stock price, not SEBI registered, not a buy/sell recommendation
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