MOSL: CROMPTON GR. CON (Buy)-1QFY19 results better than expected
Crompton Gr. Con: 1QFY19 results better than expected
(CROMPTON IN, Mkt Cap USD2.2b, CMP INR238, TP INR280, 18% Upside, Buy)
- 14% PAT beat: Sales grew 14% YoY (20% YoY on an LTL basis) to INR12b, beating our estimate of INR11.6b. Sales growth was driven by both the Lighting (+9% YoY LTL; +15% ex EESL) and Consumer Durables divisions (+23% YoY LTL). Sales were helped by a weak base of 1QFY18, which was impacted by GST transition. EBITDA grew 29% YoY to INR1.67b, with margin expanding 160bp YoY to 13.9%, led by better revenue mix. Net profit grew 30% YoY to INR1.04b, ahead of our estimate of INR0.92b.
- Margin expansion led by better revenue mix and cost-reduction measures: Gross margin expanded 180bp YoY to 32.4% (our estimate: 31%), led by (a) revenue mix improvement, and (b) continued cost-reduction measures. EBITDA grew 29% YoY to INR1.67b, beating our estimate. Operating margin expanded 160bp YoY to 13.9% v/s 12.3% in 1QFY18. Ad spends were INR240m, 2% of sales in 1QFY19 (2.1% in 1QFY18). Lighting business, which contributed 23% of revenue (v/s 25% in 1QFY18), saw 130bp margin decline YoY to 6.7%. Drop in Lighting margins was on account of price erosion in both LEDs and CFLs. Consumer Durables, which accounted for 77% of revenue (v/s 75% in 1QFY18), registered 200bp margin expansion to 19.5%.
Crompton Greaves Consumer Electricals Limited manufactures and markets a range of consumer products. The Company's main products/services include lighting products (luminaries and light sources) and electrical consumer durables (fan and appliances and pumps). It operates through two segments: Lighting Products and Electrical Consumer Durables. Its Lighting Products segment comprises luminaires and light sources. Its Electrical Consumer Durables segment comprises fans, appliances and pumps. It offers ceiling fans, table fans, pedestal fans, wall mounted fans, domestic exhaust fans, special fans and personal fans. It offers lighting products, including lamps, consumer luminaires, solar and lighting automation. Its household appliances include geysers, mixer grinders, toasters and irons. Its pumps are classified into industrial, agricultural and domestic pumps, and offers surface pumps, submersible pumps, accessories and pumping systems.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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