Buy Crompton Greaves Consumer; target of Rs 270: Anand Rathi

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Anand Rathi 's research report on Crompton Greaves Consumer

Hurt by the Covid’19-related sales loss in Mar and tax refund in the previous period, Crompton’s revenue / EBITDA / PAT slid 16% /18% /30% y/y, leading to a weak Q4. Despite poor sales, the high 13.6% EBITDA margin was due to superior sales mix and ongoing cost optimisation. Healthy net working-capital and cash-flows were steady. Management says the good growth momentum in categories persisted in Jan-Feb and resulted in market-share gains. A lean and flexible cost structure and leader in its key product categories are key positives to help Crompton comfortably sail through a challenging FY21.

Outlook

We maintain our Buy recommendation and target of `270 (32x FY22e P/E).

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