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 didn’t take place operational synergies aren’t impacted.
Last few quarters didn’t 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 that’s 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
• 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 ‘Shakti’ series – India’s 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 it’s 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
Crompton Greaves Consumer Electricals -
Q1 FY 26 results and concall highlights -
Q1 segmental revenues and EBIT -
ECD ( electrical consumer durables ) -
Revenues - 1586 cr, down 8 pc ( vs Industry wide decline of 11 pc )
EBIT - 212 cr, down 18 pc ( margin compression from 15 to 13.3 pc )
Lighting -
Revenues - 232 cr, flat YoY
EBIT - 29 cr, up 27 pc ( due margin expansion from 8.9 to 12.6 pc )
Butterfly ( Kitchen appliances ) -
Revenues - 187 cr, up 3 pc
EBIT - 7 cr, up 100 pc YoY ( due margin expansion from 1.7 to 3.5 pc )
Q1 consolidated outcomes -
Revenues - 1998 vs 2138 cr, down 6.5 pc
Gross margins @ 32.1 vs 31.9 pc
EBITDA - 192 vs 232 cr, down 17 pc ( margins @ 9.6 vs 10.9 pc )
PAT - 124 vs 152 cr, down 19 pc
Company is now debt free post repayment of 300 cr of NCDs
Muted performance in ECD division driven by weather related challenges - milder summer, above avg rains etc
Secured largest ever pumps order from Maharashtra govt ( in Q1 ) for 101 cr
Industrial fans, air circulators, heavy duty exausts, solar pumps, small appliances emerged as growth levers in ECD category
TPW fans + Cooler + residential pump categories saw a sharp slowdown in Q1 due lower temperatures and excess rains
Company has decided to enter roof-top solar energy business. It’s a large category with a current mkt size of 20k cr ( a comment from Q4 FY 25’s concall ). 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
Company believes - even when the PM Kusum scheme ends, the solar pumps business should continue as a going concern with increased demand because it’s 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 ( taken from Q4 FY 25’s concall )
Company’s solar pumps business grew by > 100 pc vs Q1 FY 25
Large kitchen appliance business recorded sales of 15 cr in Q1
B2B lighting grew in double digits in Q1. Outdoor and decorative lighting saw good traction in Q1 ( these r higher margin areas )
Added 40 new SKUs in Butterfly’s product portfolio
Company’s Solar rooftops business is executed with a selected partner ( both sourcing and installation ). Crompton has overall responsibility for marketing and branding. The EBITDA margins in this business are similar to company level margins
Seeing good demand trends in the ECD business wef July
Still aiming for double digit growth in the Butterfly’s kitchen appliances business with a 100 bps EBITDA margins improvement in FY 26
Margin improvement in lighting business is led by greater share of business from decorative, downlighter, panels business ( vs bulbs / batons )
Disc : holding, biased, not SEBI registered, hoping for a long overdue recovery in the FMEG space, also holding Orient electric, posted for educational purposes
1 Like
Crompton Greaves consumer electricals -
Q2 FY 26 results and concall highlights -
Revenues - 1916 vs 1896 cr, up 1 pc
Gross margins @ 30.3 vs 31.9 pc - due rising commodity prices
EBITDA - 158 vs 204 cr, down 22 pc ( margins @ 8.3 vs 10.7 pc )
Exceptional item - (-) 20 cr
PAT - 75 vs 128 cr, down 41 pc
Segmental performance -
ECD -
Revenues - 13971 vs 1393 cr
EBIT - 145 vs 206 cr
Prolonged monsoons had an adverse impact on Fan sales. Commodity price pressures added to margin contraction. Have taken price hikes wef Nov 25
Pumps delivered mid teens growth led by Solar pumps
Have received an order of 445 cr for Solar roof top installation
Small home appliances also grew in double digits
Large home appliances witnessed a sharp slowdown led by erratic weather, competitive discounting and inventory challenges. However, their sales were up 34 pc on a QoQ basis. LDAs include - Coolers, Water heaters, TPW fans etc
Salience of premium offering in fans improved to 25.4 pc, up 180 bps
Lighting -
Revenues - 261 vs 253 cr
EBIT - 41 vs 27 cr
Lighting business witnessed high teen volume growth. However, revenue growth was @ 3.1 pc led by pricing pressures
Witnessed good growth in high mast and commercial indoor lighting
B2C lighting growth was led by Ceiling and Street lights
Butterfly -
Revenues - 293 vs 258 cr
EBIT - 22 vs 17 cr
Revenue grew by 14 pc, led by double digit volume growth in core categories, new product launches. EBITDA margins expanded by 60 bps to 9.5 pc
Comments from Q2 concall -
Have already garnered 6-8 pc mkt share in Solar Pumps business, within 2 yrs of launch ( an encouraging sign ). Similarly, Solar rooftops business is expected to grow rapidly - as is evident from the initial order flow. Both these r high ticket size, good margin businesses - should become a key growth driver going forward. An avg Solar rooftop installation costs about 2-2.5 lakh for a 3 KW unit
EBIT margins in company’s lighting business expanded by 480 bps - a very encouraging sign
Company has incurred an exceptional cost of 20 cr - due restructuring of their Goa manufacturing facility
Company has been investing and spending aggressively to improve its go to mkt strategies and advertising on Online Chanels
On a blended basis, company has hiked the prices of its fans portfolio by 1.4 pc
Current order pipeline wrt their Solar Pumps business stands @ 255 cr ( which is a substantial amount ). Solar pumps is one segment that’s growing @ 100 pc on a YoY basis
Company is planning to enter new / adjacent product categories. They did not disclose the category name due to competitive reasons
The Solar Rooftop order worth 500 cr that the company has should get executed within next 6-12 months
A lot of commercial TPW fans that company makes are used for drying crops. Since the crop output is expected to be good, this business should pick up going forward
Company aspires to scale up their Solar Pumps + Solar Rooftops business to 2000 cr + kind of annual run rate in next 24 months. Company believes, this is a sun rise business area for them
Disc: holding, biased, not SEBI registered, not a buy/sell recommendation, posted only for educational purposes
2 Likes
Crompton Greaves Consumer Electricals -
Q3 FY 26 results and Concall highlights -
Revenues - 1898 vs 1769 cr, up 7.3 pc
Gross margins @ 32.2 vs 33.2 pc
EBITDA - 195 vs 188 cr, up 3 pc ( margins @ 10.3 vs 10.8 pc )
PAT - 101 vs 112 cr, down 10 pc ( fall in PAT is due to exceptional charge of 20 cr due implementation of new labour codes )
Gross Margins contracted due rising commodity price inflation
Segmental performance -
ECD -
Revenues - 1385 vs 1288 cr
EBIT - 180 vs 196 cr, margins @ 13 vs 15.2 pc
Took price hikes across categories in Oct 25. BLDC fans continue to grow strongly
Pumps grew in double digits, aided by 2X growth in Solar pumps. Gained mkt share across agri, solar and residential pumps. Large appliances grew in double digits led by water and room heaters. Company is now No 2 in water heaters across India. Large Kitchen appliance business reduced its EBITDA losses on a QoQ basis
Solar rooftops generated revenues of 19 cr in Q3 - their first Qtr of operation. Orders in hand @ 365 cr
Lighting -
Revenues - 275 vs 258 cr
EBIT - 33 vs 28 cr, margins @ 12.1 vs 10.8 pc
Strong volume growth witnessed infighting segment across B2C and B2B segments
B2C - growth led by Ceiling lights. Also forayed into chargers, power banks
B2B growth led by street and Industrial lighting. Have won some marquee projects
Butterfly kitchen appliances -
Revenues - 245 vs 238 cr
EBIT - 14 vs 12 cr, up 20 pc, margins @ 5.7 vs 4.9 pc
Cookers and Gas stoves emerged as primary growth drivers in Q3
Gross margins in this segment improved significantly led by price hikes and better product mix
New product launches in Q3 - Stabilisers, Mobile Chargers, Power Banks, New models of Kitchen Chimneys
Company has decided to enter Residential Wires and Cables segment wef Q4 FY 26 - its an adjacent category and company believes they have a right to win here given their strong brand pull
To begin with- company is going to outsource these products ( Wires and Cables ). Have worked on their go to mkt strategy in this segment over last 6-9 months
Solar roof top sales in Q3 were all B2G ( to state Govt tenders ) sales. B2C sales should start to happen wef Q4
With solar rooftops + solar pumps + residential wires, company’s total addressable mkt doubles to 1.6 lakh cr vs 80k cr previously. This was critical to achieve from company’s long term growth potential’s PoV
Looking at 2 more rounds of price hikes in Q4 and Q1 in their fans business
Company’s 350 cr Greenfield capex to manufacture fans is progressing well. Should go commercial in FY 28
Butterfly has been premiumising its product portfolio, which is aiding their gross margin expansion
Entering wires and cables is a well thought out and a long term plan. They r very serious about the same. They r not entering this segment not for the sake of entering
As their scale in solar roof tops + solar pumps keeps improving - their Gross Margins in these segments are seeing an improving trend. This augurs really well for them as this would allow them to offer the best products at competitive prices to the B2C and B2G mkts
An avg Solar rooftop installation costs about 2-2.5 lakh for a 3 KW unit
Company aspires to scale up their Solar Pumps + Solar Rooftops business to 2000 cr + kind of annual run rate in next 24 months. Company believes, this is a sun rise business area for them
The solar rooftop order book of aprox 400 cr should get executed over next 9 - 12 months
Disc: hold an investment position, biased, not SEBI registered, not a buy/sell recommendation, posted only for educational purposes
3 Likes