Crompton Greaves Consumer Electricals Ltd - BUY

[Pee Vee]

Crompton Greaves Consumer Electricals Ltd. - BUY

CMP Target Upside Tenure

Rs 216 Rs 262 21.3% 1 Year

Crompton operates in four distinct product categories - fans, lighting, pumps and appliances. Fans & lighting contribute ~42% & ~31% of its turnover respectively. Pumps and small appliances account for ~20% and ~10% respectively of its revenue.The company has a leading market shares across the product categories it operates in. We expect the company to register revenue & PAT CAGR of ~19% & ~28% over FY17-19E, helping it to generate strong free cash flows of Rs1,146 cr over FY17-19E. Crompton’s asset light approach, margin expansion & improving market share across products will lead to industry leading RoCE (44-48% over FY17-19E). Given these positives we value the stock at 35x on FY19E earnings. We have a BUY rating on the stock to arrive at the 12 months target price of Rs 262.

IIFL Research

[Deepumirwani]

HI. I WOULD LIKE TO INVEST IN CG CONSUMER ELEC FOR LONG TERM PERIOD. ABOUT 2-3 YEARS. WHAT ARE YOUR VIEWS? WHAT TARGET WOULD YOU SUGGEST?

OR DO YOU THINK ITS BETTER TO BOOK BY END OF 2017?

THANKS