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- 25 Jul 2022
- ICICIdirect Research
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CGCEL POSTED Q1FY23 NUMBERS
CROMPTON - 417 Change: 7.15 (1.75 %)News: CGCEL’s consolidated revenue increased by ~77% YoY to ~Rs 1863 crores on a favorable base and consolidation of Butterfly business. On a three-year basis, CGCEL’s core business revenues (i.e. excl. Butterfly) grew at CAGR of 6% led by ECD segment revenue CAGR of 8%. Higher raw material prices and limited price hikes led to decline in gross margin by ~96 bps YoY, however, EBITDA margin contraction was restricted to 11.8% supported by savings in employee costs and improved operating leverage. PAT rose by ~33% YoY to ~Rs 126 crore mainly tracking higher topline growth.
Views: We believe CGCEL saw growth across all of its segments supported by factors such as channel expansion, new product offerings, and a greater emphasis on promotion schemes. CGCEL's revenue growth (core business) remained lower on a three-year CAGR basis, at 6%, due to the poor performance of its lighting division (which remained flat to its pre-covid level). In terms of margins, CGCEL's profitability was less impacted in Q1FY23 compared to its peers because the company was able to pass on a large portion of inflationary pressure to its customers. Crompton increased its presence in the kitchen space through expansion of its line of small domestic appliances by acquiring Butterfly and entered the built-in kitchen space. With the launch of 'Crompton Signature Studios,' the company recently introduced Built-in Kitchen Appliances, offering a comprehensive range of 38 models including chimneys, gas hobs, built-in ovens, microwaves, and dishwashers. We await commentary from the management regarding the expansion of its appliance business, the demand outlook, and future margin guidance.
Impact: Neutral