Buy Crompton Greaves Consumer, target price Rs 255: CLSA

CLSA has maintained buy rating on Crompton Greaves Consumer Electricals with a target price of Rs 255. The stock ended up 1.53 per cent at Rs 218.85 on Wednesday while the BSE Sensex closed 742.84 points up (+2.42 per cnet) at 31,379.55.

Crompton Greaves Consumer Electricals Ltd., incorporated in 2015, has a market cap of Rs 13728.11 crore.

Investment Rationale


Relatively low share of seasonal products in the overall sales mix, limited exposure to B2B/housing, and an ability to extend working capital to the channel makes Crompton Consumer relatively resilient in the discretionary space, said CLSA. Fans, lighting and pumps, which are less discretionary, account for 90 per cent- plus of revenue, said CLSA.

Financials

Crompton Greaves Consumer Electricals' key products/revenue segments include Electrical Consumer Durables which contributed Rs 3200.35 crore to sales value (71.45 per cent of total sales); Lighting Products which contributed Rs 1261.95 crore to sales value (28.17 per cent of total sales); Scrap which contributed Rs 8.23 crore to sales value (0.18 per cent of total sales); Export Incentives which contributed Rs 6.80 crore to sales value (0.15 per cent of total sales) and Sale of services which contributed Rs 1.58 crore to sales value (0.03 per cent of total sales)for the year ending March 31, 2019.

For the quarter ended December 31, 2019, the company reported consolidated sales of Rs 1071.29 crore, down -.42 per cent from last quarter sales of Rs 1075.79 crore and up 3.98 per cent from last year same quarter sales of Rs 1030.31 crore. The company reported net profit after tax of Rs 160.97 crore in the latest quarter.

Promoter/FII Holdings

Promoters held 26.20 per cent stake in the company as of third quarter ending December 31, 2019, while FIIs held 30.88 per cent, DIIs 25.30 per cent and public & others 17.62 per cent.