Crompton Greaves Consumer Electricals – First Cut Q4FY21 – ICICI Direct

(CMP: Rs.389; MCap: Rs.24,406 crore)

The performance of Crompton Greaves Consumer Electricals (CGCEL) Q4FY21 was well above our expectations on all fronts, thanks to healthy performance from both the Electrical Consumer Durables (ECD) and lighting divisions.

Summary of Fourth Quarter Fiscal Year Results21

– CGCL revenue is Rs. 1,522 crore up 48% yoy (Vs I-direct estimate of ~ Rs. 1,322 crore) thanks to a strong performance of the ECD segment which grew 61% yoy to Rs. 1193 crore (I-direct estimate: Rs. 910 crore). The lighting industry also saw a decent 15% year-on-year growth at Rs. 329 crore. Strong rural demand and a favorable base contributed to the strong performance of the company in the fourth quarter

– Gross margins were marginally down 81 basis points year on year, mainly due to higher raw material costs. However, savings in personnel and other costs of 84 bps and 120 bps yoy helped push the EBITDA margin from 122 bps yoy to 15% respectively (Vs I-direct estimate of ~ 14%)

– The PBT came in at Rs. 231 crore, up 69% year-on-year (Vs I-direct estimate: Rs. 178 crore), which mainly follows sales growth and a higher EBITDA margin

– The PAT at Rs. 249 crore also came in better than our estimate of Rs. 134 crore supported by tax gains at T4FY21. Like to love PAT after adjustment for the impact of IT valuation order (including interest in it) for previous years grew 63.5% year-on-year

For FY21, the company reported 6% year-over-year revenue growth despite losing first-quarter sales due to the lockdown. The company reported 24% year-on-year growth in net income in fiscal 21, led by a 200 basis point increase in EBITDA margin to 15%. The company announced a total dividend of Rs. 5.50 / share for FY21 (56% payout) and maintains debt-free status (with a net cash balance of Rs. 895 crore) on the book. We are awaiting management’s comments on the impact of Wave 2 and high commodity inflation in ECD and lighting products. While we maintain our positive position on the stock, the detailed update of the fourth quarter of fiscal 21 results will be released after the call.

Shares of Crompton Greaves Consumer Electricals Ltd were last traded in the BSE at Rs.388.8 from the previous close of Rs. 383.5. The total number of shares traded during the day was 74,400 in more than 2,289 transactions.

The stock hit an intraday high of Rs. 397.8 and an intraday low of 384.45. The net turnover during the day was Rs. 29,175,706.

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