MOSL: CROMPTON GR. CON (Buy)-A ‘run-of-the-mill’ quarter; ECD margins to improve
Crompton Gr. Con: A ‘run-of-the-mill’ quarter; ECD margins to improve
(CROMPTON IN, Mkt Cap USD2b, CMP INR219, TP INR270, 23% Upside, Buy)
- Earnings in-line: 4QFY19 revenue grew 7% YoY to INR12b, while EBITDA was up 2.5% YoY to 1.7b. Reported EBITDA margin declined 60bp YoY to 14%, but adjusting for ESOP charges, EBITDA margin contracted 130bp YoY to 14.6%. Other income was higher than expectation at INR172m. Thus, adj. PAT came in at INR1.13b, in line with our expectation. For FY19, revenue growth stood at 11%, while EBITDA margin stood at 13.1% (-10bp). Adj. PAT growth was decent at 16% to INR3.7b.
- Lighting segment margins rebound, revenue growth to follow: On the back of cost optimization initiatives, the Lighting segment reported PBIT margins at 11.5% v/s 7.3% in 9MFY19. Management focus is back on revenue growth now as (a) LED constitutes 85% of the business, therefore the strong decline in conventional lighting should not have significant impact on overall growth, (b) price declines have moderated in the B2C segment, and (c) there is continued thrust on innovation (for instance: anti-bacterial bulb).
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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