CROMPTON GREAVES CONSUMER
CMP - ₹230
Acompany well-known for its electric fans and residential pumps with leading position in lighting is also penetrating fast into household appliances and agricultural pumps businesses. Currently, the company derives 28% from lighting and 72% from electrical consumer durables. During FY18, the company has divested its US power business in July 2018 and is expected to sell its power systems business in Hungary by the end of November 2018. Going forward, it is expected to focus on railway business, services business and intelligent product portfolio. Financially, it has posted robust topline and bottomline growth of 119% and 176%, respectively, in FY17. Though the company’s D/E stands at 1.2, it holds favourable interest coverage of 7.9. The company has been focusing on premiumisation due to which the share of revenue from premium fans has increased to 18% from 16% in FY17. Thereby, with premiumisation retaining cost efficiencies, we recommend a BUY in the scrip for a target of ₹264 and stop loss of ₹212.