Crompton Greaves Consumer Electricals Ltd is poised to benefit from higher premiumization and new product launches in the near future. The company’s management at its recent analysts meeting discussed new launches and innovation as it preps for the summer season ahead, particularly in its fans vertical.
Spearheading the next generation of fan technology in India, Crompton has launched Nucleus, an in-house advanced BLDC platform. Under this platform, the company has launched two products that help save up to 60% energy, apart from having other features such as efficient motor, and smart connectivity. The company has also launched XTECH, an advanced induction motor platform. Both platforms will be manufactured in-house which should help Crompton have a better control on the supply chain.
“In FY24, ₹750 crore (about 10%) worth sales were from new products. The R&D team size is at 200 now (141 in FY23),” said analysts from Jefferies India in a report on 27 February, adding that they estimate electric consumer durables (ECD) sales to grow at 13% CAGR over FY24-27. Over the same period, the broking firm estimates sales and profit after tax CAGR at 12% and 22%, respectively, driven by healthy ECD growth and margin expansion, as Butterfly synergies kick-in. CAGR is compound annual growth rate.
The new platforms will also support Crompton’s endeavour to scale up its premium offerings. Note that premium fans are growing at 2.5x of regular fans’ growth. Crompton derives about 25% of its fans segment revenue from premium products and aims to raise this share to 40% in the coming years.
To be sure, the company’s ECD segment remains a bright spot, clocking 14% and 27% year-on-year growth in revenue and Ebit (earnings before interest and tax) for the nine-month ended December (9MFY25). ECD contributed nearly 76% and 86% of the company’s total gross segment revenue and Ebit. The ECD segment verticals are fans, pumps, appliances and built-in kitchen applications. Within pumps, the outlook for solar pumps is promising.
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Butterfly business
Crompton’s other two segments are lighting and Butterfly. In the first nine months of FY25 (9MFY25), lightning revenue rose 4% year-on-year, but its Ebit fell by 6%. The lightning segment is suffering as realizations are under pressure.
The Butterfly business, acquired by Crompton a couple of years ago, underwent restructuring, which included scaling down its institutional and corporate businesses and ramping up retail sales. The business is showing encouraging signs of recovery. Butterfly’s revenue dropped by 14% in 9MFY25 and at a slower rate of 4% in the December quarter (Q3FY25). The business is expected to report growth in the next few quarters.
On the other hand, a delay in Butterfly synergies playing out and/or overall demand weakness is a key risk for the Crompton stock. The company’s shares have declined close to 20% so far in 2025, even as investors are sitting on 10% returns over the past one year.
“We like Crompton’s thrust on innovation/premiumization and focus on new segments (solar pumps),” said a Kotak Institutional Equities report dated 28 February. After the recent correction in the stock, Crompton is now trading at about 30x one-year forward price-to-earnings multiple, it added.
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