Crompton Greaves Consumer Electricals Ltd - BUY
Posted: Thu May 04, 2017 6:29 pm
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
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