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

That is TDS, not actual taxation

I will say beware extra from people and their suggestions who say last year we or our mutual funds returned this much return, did you have it? It’s foolish to judge a fund by last 6 month or 1 year performance, true performance comes out in 5-10 year period, and it’s perfectly possible quant might be a good fund, but we don’t know it yet. I will repeat again, don’t follow funds who performed last year well. Most returns normalise on longer period – check this interesting research by ETMONEY – x.com.

I say for starters, you can consider investing in NIFTY500 Index fund. In that meanwhile, read more, and when you understand, then try investing in other MFs. How much allocation to equity depends on your risk appetite, and articles shared above can be useful.