A VALUE BUY / GUESS

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SUMIT GHEI
Posts: 95
Joined: Thu Nov 09, 2017 12:19 pm

Re: A VALUE BUY / GUESS

Post by SUMIT GHEI »

Crompton Greaves Consumer Electricals Limited (CGCEL) - is one of the oldest and well recognized
Indian household consumer brand, earlier part of Avantha Group managed company named
Crompton Greaves, and post demerger sometime in May 2016, the consumer electrical business
has been rechristened as CGCEL under new management. Global private equity giants Advent
International and Temasek, an investment company of government of Singapore collectively owns
significant shares in this listed entity. CGCEL manufactures and markets a wide spectrum of consumer
products ranging from fans, light sources and luminaires, pumps and household appliances,
such as geysers, mixer grinders, toasters and irons. Crompton has been the market leader in fans,
domestic pumps and street lighting for over 20 years. It has manufacturing locations in Goa,
Vadodara, Ahmednagar and Baddi. Crompton products are available in nearly 150,000 retail points
across the country. CGCEL reported a decent year on year topline growth of 14% to 1204 crores
and an EBITDA growth of 29.5% to 167 crores with an expansion in operating margins in the first
quarter of FY19. Revenue growth was aided by market share gains in fans and pumps with focuson driving profitability through product innovation and operating efficiencies. CGCEL was the first
company to introduce 'Anti-dust' fans in the market around one and half years ago. The company
witnessed good success since its launch with sales worth Rs 200 crores from the 'Anti-dust' fan,
making it the single largest selling innovation in the market.CGCEL has also introduced 'Air 360'
fan which has 50 percent more breeze coverage area than a traditional fan. Around 10 percent of
total fans growth was driven by Air 360. Premium fans range (above Rs 2,000) range witnessed a
growth of over 20 percent on account of the expansion in the distribution network and higher advertisement
expenditure. Within fans, the company gained a market share of 100 bps during the quarter.
CGCEL is continuously working on product innovation, diversification, and premiumisation
and also gaining market share across segments and products. We firmly believe that based on the
current run rate, company can easily close FY19 with a topline of 4500+ crore and an EBITDA of
700 crore+ backed by strong management with impeccable leadership and marketing skills. Market
cap is roughly 3X the expected FY19 topline however globally all the consumer companies
would trade at valuation of anywhere between 4X to 6X offering room for further appreciation in its
stock price. Add on every decline with a target price of Rs.325 in one year time frame
Pee Vee
Site Admin
Posts: 453
Joined: Mon Dec 26, 2016 10:45 pm

Re: A VALUE BUY / GUESS

Post by Pee Vee »

Which brokerage report is it? Do you have a pdf copy or a link? The stock looks interesting.
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