ICICI Securities Delivers STRONG BUY Call on Crompton Greaves: Target Price Revealed!

ICICI Securities released a research report on Crompton Greaves Consumer Electricals, reiterating a BUY recommendation. The report acknowledges a weaker-than-expected quarter but points to significant operational improvements and portfolio adjustments.

Key takeaways from the report include: * Market Share Gains: The company successfully increased its market share in its primary product categories, even during a subdued quarter. * BLDC Product Growth: Business-to-consumer (BLDC) products witnessed approximately 50% year-over-year growth, driven by strong demand from modern trade and e-commerce channels. * Solar Business Expansion: The solar energy business exhibited exceptional growth, nearing 100% year-over-year, supported by a healthy pipeline of new orders. * Challenges in TPW and LDA: The Toiletries, Personal Care (TPW) and Lighting & Domestic Appliances (LDA) businesses faced headwinds due to rising prices (inflation) and increased competition. * SDA Business Performance: The Small Domestic Appliances (SDA) segment achieved double-digit growth, boosted by new product launches and increased consumer spending during festive periods. * Lighting Margins: The lighting division reported healthy profit margins, attributed to a favorable product mix that prioritizes higher-value items. * B2B Lighting Strategy: Crompton Greaves is adopting a selective approach for Business-to-Business (B2B) lighting projects, concentrating efforts on specific infrastructure developments.

Outlook: ICICI Securities forecasts Crompton Greaves to achieve revenue and Profit After Tax (PAT) Compound Annual Growth Rates (CAGRs) of 7.3% and 10.6%, respectively, between FY25 and FY28. The revised target price, based on a Discounted Cash Flow (DCF) model, is set at INR 340, down from INR 380 previously. This implies a target Price-to-Earnings (P/E) multiple of 29 times the estimated FY28 Earnings Per Share (EPS).

Impact: This news has a direct positive impact on investor sentiment towards Crompton Greaves Consumer Electricals, potentially influencing its stock price. The report provides a clear outlook and justified valuation, guiding investors on the company's future prospects. The rating remains BUY, indicating confidence from ICICI Securities. Rating: 8/10

Terms: * CAGR (Compound Annual Growth Rate): The average annual growth rate of an investment over a specified period of time longer than one year, assuming profits are reinvested. * PAT (Profit After Tax): The profit remaining after all expenses, including taxes, have been deducted from the total revenue. * DCF (Discounted Cash Flow): A valuation method used to estimate the value of an investment based on its expected future cash flows. * P/E (Price-to-Earnings) Ratio: A valuation ratio that compares a company's stock price to its earnings per share. * EPS (Earnings Per Share): A measure of a company's profit allocated to each outstanding share of common stock. * YoY (Year-over-Year): A comparison of current period data to the same period in the previous year. * TPW (Toiletries, Personal Care): Refers to products related to personal hygiene and grooming. * LDA (Lighting & Domestic Appliances): Refers to products used for lighting and household chores. * SDA (Small Domestic Appliances): Refers to compact household appliances like blenders, toasters, irons, etc. * BLDC (Brushless DC Electric Motor): An electric motor that uses an electronic commutator instead of a mechanical commutator, offering better efficiency and durability.