Crompton Greaves Consumer Electricals Set to Rally 40%: Unlocking Growth Potential

Investors are taking notice of Crompton Greaves Consumer Electricals, with shares rallying as much as 6% after a prominent brokerage initiated coverage on the stock with a Buy rating. This development comes with a price target of Rs 350, implying an upside potential of 40% from current market levels.

Initiating Coverage with a Buy Rating

The brokerage cited various growth levels in the coming quarters as the reason for its positive outlook. The recent 75% acquisition of Butterfly has significantly broadened Crompton's appliances portfolio, creating strong synergies. This deal is expected to strengthen the company's manufacturing capabilities, streamline operations and distribution, and achieve deeper integration across the value chain.

Growth Strategy and Initiatives

Crompton's new 'Crompton 2.0' program is built around four strategic pillars: strengthening and protecting the core portfolio, driving gains in the kitchen segment, transforming the lighting business, and expanding into new segments. Key enablers such as organizational development, brand building, operational excellence, and digital enablement are aimed at delivering faster growth and improved profitability.

• Strengthening and protecting the core portfolio
• Driving gains in the kitchen segment
• Transforming the lighting business
• Expanding into new segments

Investment in Brand Visibility and Digital Platforms

The company has stepped up investments in advertisements to enhance brand visibility, with a raised allocation towards digital platforms. This strategy has led to increased brand salience and higher engagement on social media, given the significant time spent by the new-age audience on these platforms.

Financial Projections and Growth Estimates

Estimates suggest that Crompton will deliver around an 8% revenue CAGR over FY26–FY28, with segment-wise growth estimated at 8% in ECD, 6% in Lighting, and 10% in Butterfly. Gross margins are likely to improve during FY27–FY28, supported by pricing actions, product premiumization, and ongoing cost-efficiency initiatives.

Additionally, an EBITDA and PAT CAGR of 17% and 21%, respectively, is expected over the same period, with EBITDA margins seen rising to 10.3% in FY27 and 11.2% in FY28.

Conclusion and Outlook

With a strong growth strategy in place and a positive outlook from the brokerage, Crompton Greaves Consumer Electricals is poised for significant growth. Remember, this is a perspective and not a prediction. It's essential to do your own research and consider multiple viewpoints before making any investment decisions.