Crompton Greaves Consumer Electricals: Enough headroom for growth in core categories | IndiaNotes.com |
We met the management of Crompton Greaves Consumer Electrical (Crompton) and came back convinced about the medium/long term opportunities for growth and management’s strategy/focus to capitalize on the opportunities. Key focus areas for the management from here includes a) Continued growth in core categories led by innovation b) ramp up in Geyser/Cooler segment to be top 2/3 players in the segment over next few years. c) Implementation of the Go–to-Market programme successfully d) building adjacencies in terms of product category (aligned with goal of profitable growth and not just add top line) e)geographical expansion in markets like Africa/Middle East (meaningful presence in these markets in few categories). We believe head room for continued growth in core categories, ramping up of new segment and improved reach should help the company deliver above market growth. Focus on premiumization, improved volumes and cost control measure should help improve margins. We expect the growth to revive in near term as new launches in fans/pumps segment start showing results along with sustained growth in lighting. We also expect sales to grow at a CAGR of 12% and earnings CAGR at 19% over FY17-20E. We maintain “BUY” with a TP of Rs 297.
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