Thanks for this info, did they provide any more info on how the sourcing of funds will happen i.e how much loans they will be raising, interest rates, equity dilution etc.
Crompton Greaves Consumer Electricals Ltd- Demerged, independent and professionally managed business
1 Like
Started reading about this recently. Quick notes:
Good business run by professional management although no promoter with skin in the game.
Market leader in ceiling fans and pumps. Aiming to premiumize their product offerings and some initiatives (Project Unnati) underway to improve revenue and profitability.
Stake in butterfly and can scale kitchenware products pan India. Although proposed merger didnāt take place operational synergies arenāt impacted.
Last few quarters didnāt have great results due to regulations (star ratings for fans) and advertising spends.
Available at reasonable valuations compared to industry peers. I feel residential real estate up cycle will show up in this sector with a lag and as such business demand will increase. (All new flat bookings will need electricals during occupancy.)
Recent investor call:
- Good growth on ECD - fans, pumps (agricultural too), geysers, etc. 2.0 is on track and premiumization theme working out well.
- Lighting too doing well having procured bulk some government orders. Stopped CFL business and moved to LED earlier so thatās also another reason for revenue decline.
- Butterfly sales showed decline due to corporate orders missing and they want to change channel strategy from such ad hoc model to more repeatable business. And scale the business from predominantly south player to pan India presence leveraging crompton network.
- Plan to use Butterfly manufacturing capacity for Crompton kitchen manufacturing. Should lead to better margins.
- In 2-3 quarters all increased spend on branding and re-channelling should start showing up in results.
Yes Securities report :
Yes_Securities_Crompton_Consumer_Q3FY24.pdf (354.2 KB)
2 Likes
Q4 FY24-
expense increase bcz we spend more on Ads and marketings.
Butterfly brand turnaround is on the way.
Undertook three price increases in Fan category (Pricing Power) across categories in H2
ā¢ Developed digital platform for remote monitoring system for solar pumps
Secured further orders in solar pumps of the magnitude of Rs. 87 Cr in Q4; Total empanelment for Rs. 122 cr during the year of which Rs. 28 cr executed
Lighting business is subdued.
Focused on recent launch of āShaktiā series ā Indiaās first star rated gas stove in the retail market (Under Butterfly Brand)
Products- Fan, Cooler, Water purifier,Water Pump(Solar Pump),Press,Lights,Mixer juicer.,Geyser,Kitchen stove,chimney,dishwasher,microwave.
Amazon ratings of all product is good @4Star.
Main product- Fan, cooler.
Butterfly( Butterfly, a top brand for kitchen appliances in India, is renowned for modern aesthetics and high-quality products, especially in the southern regions. )- subsidiary
Crompton Greaves Consumer Electrical -
Q4 and FY 25 results and Concall highlights -
Q4 outcomes -
Revenues - 2061 vs 1961 cr, up 5 pc
Gross margins @ 33.9 vs 31.9 pc
EBITDA - 264 vs 204 cr, up 30 pc ( margins @ 12.8 vs 10.4 pc )
PAT - 172 vs 133 cr
FY 25 outcomes -
Revenues - 7864 vs 7313 cr
Gross margins @ 32.9 vs 31.6 pc
EBITDA - 888 vs 714 cr, up 24 pc ( margins @ 11.3 vs 9.8 pc )
PAT - 564 vs 442, up 27 pc
Segmental performance for FY 25 -
ECD ( electrical consumer durables ) -
Revenues - 6010 vs 5392 cr
EBIT - 928 vs 775 cr
Fans sustained mid single digit growth amid weak consumer sentiment
Pumps segment witnessed robust growth led by Solar Pumps
Appliances grew in mid teens and Appliance segment revenue crossed 1000 cr for the first time
Air coolers grew @ 50 pc +, mixer grinders grew @ 30 pc +
Built in Kitchen appliances clocked revenues of 60 cr, reducing their EBITDA losses
Lighting -
Revenues - 1018 vs 996 cr, up 2 pc
EBIT - 120 vs 105 cr, up 14 pc ( margins @ 11.8 vs 10.6 pc ). EBIT margins in Q4 climbed to 15.9 pc - sharp margin recovery
Industry wide price erosion ( in double digits ) continues
Ceiling lights, Batons continued to perform well
Butterfly -
Revenues - 865 vs 931 cr ( in Q4, revenues were @ 187 vs 166 cr )
EBIT - 42 vs 9 cr { in Q4, EBIT was 11 vs (-) 24 cr }
Exploring setting up a Greenfield facility with an investment of 350 cr. Should be able to finalise in next few weeks. Initially, this facility will be dedicated to manufacturing of fans. May add more products at a later stage
Company has decided to enter roof-top solar energy business. Its a large category with a current mkt size of 20k cr
Their solar pumps are now clocking 200 cr of annual sales
Likely to enter a few more categories in FMEG space in near future. Will announce, once finalised
Butterfly is seeing a sharp turnaround in both topline and bottomline despite tepid consumer demand
Gross Margin expansion for FY 25 are led by lower RM prices
In the Solar Rooftops business, brand name does play an important role. Plus the addressable mkt is huge. Confident of a quick ramp up going forward
Revenue growth in large appliance business has not been encouraging. Company strongly believes, their products are genuinely better and differentiated. They just need better execution, demand generation, marketing etc
Onset of summers in Q1 has been delayed. Build up of sales momentum may be back ended this FY
Momentum in the Solar pumps segment is likely to continue in FY 26
Company believes - even when the PM Kusum scheme ends, the solar pumps business should continue as a going concern with increased demand because itās so beneficial for the farmer. PM Kusum is just the initial push ( which is often required ) just like Fame 1, Fame 2 subsidies in the EV business
Intend to take Butterfly pan India. However, that is a long term plan. At present, they are concentrating on strengthening its core ie its hold in South India
Shift of product mix away from LED Bulbs towards Ceiling lights + Ceiling panels is helping them see a sharp margin recovery. Hopeful of being able to sustain the Q4 margins going forward as well
Disc: holding, biased, not SEBI registered, not a buy/sell recommendation
3 Likes