Nomura has maintained its 'Buy' rating on Crompton Greaves Consumer Electrical but lowered its target price to Rs 292 from the earlier level, cutting its target price-to-earnings multiple to 25 times from 28 times to factor in near-term earnings risks from higher commodity costs.
"Crompton's 2QFY27 consolidated revenue at Rs 22.6 billion (+18% y-y) was 4%/5% above our/consensus estimates. EBITDA margin came in at 9% (Nomura/consensus estimates: 8.9%), leading to EBITDA of Rs 2 billion, +24% y-y. Thus, APAT was up 28% y-y," the brokerage said in its latest report.
Electrical Consumer Durables (ECD) revenue grew 19% year-on-year, against Nomura's estimate of 14%, while EBIT margin at 11.6% was below its estimate of 12.5%. Lighting revenue rose 14%, with EBIT margin at 12.9%, against the brokerage's estimate of 11.5%. Butterfly reported 17% revenue growth and a 7.4% EBIT margin, against Nomura's estimate of 5.5%.
"All segments grew in double-digits (DD) y-y on the back of new launches and premium mix. Supply chain and inventory is now normalized," management said, according to the report.
The company has taken year-to-date price hikes of 15%-16% and passed on around 80% of cost inflation. New businesses across solar and wires contributed 10% of revenue, while exports grew more than 70% year-on-year on a low base.