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  • 30 May 2022
  • ICICIdirect Research

Crompton Greaves Consumer Electricals posts lower revenue from lighting products leading to muted topline growth

CROMPTON - 459 Change: -7.65 (-1.64 %)

News: CGCEL’s consolidated revenue increased marginally by ~2% YoY to ~Rs 1548 crores led by slow offtake in lightings and pump and appliances segment. This was mainly due to Covid-19 induced supply chain disruption. Higher raw material prices led to decline in gross margin by ~100 bps YoY, however, EBITDA margin contraction was restricted to 14.8% supported by savings in other costs. PAT declined by 29% YoY to ~Rs 179 crore as the base period profit includes one-time tax benefit.

Views: We believe that CGCEL's profitability was less impacted in Q4FY22 than its peers since the company was able to pass on a large portion of the inflationary pressure to its customers. Cost-optimization measures, combined with the introduction of premium products, aided the company in maintaining its EBITDA margin on a year-over-year basis. CGCEL's revenue increased by 12% year on year to Rs 5394 crore in FY22, driven by a 15% year on year increase in the ECD segment to Rs 4311 crore. On the margin front, the EBITDA margin remained constant at 14.2%, while PBT from exceptional items increased by 6% year on year to Rs 765 crore. The reported PAT for FY22 was Rs 578 crore compared to Rs 616 crore in FY21, which includes the tax benefit in the base period. The company has raised Rs 1152 crore in debt to fund the Butterfly acquisition. We await the management’s comments on price hikes and margin outlook.

Impact: Neutral