Crompton Greaves Strategy 2.0 – To Focus On Absolute Profit Growth Instead Of Margins: ICICI Securities

ICICI Securities Report

Crompton Greaves Consumer Electricals Ltd. has done key fundamental changes to its business under strategy 2.0 which are likely to be discounted cash flow accretive in our view.

1. it plans to divide the business in multiple small business units which will likely drive the accountability and improve efficiencies,

2. there will be separate on-ground sales teams for multiple product(s). It is likely to result in stronger connect with the trade and higher throughput-per-store,

3. Crompton has plans to premiumise the portfolio and believes Crompton and Butterfly Gandhimathi Appliances Ltd.'s brands have potential to drive premiumisation,

4. There will be higher focus on e-commerce and digital and

5. it plans to enter multiple new categories such as switches, switchgears, wires and cables and other adjacent products.

We remain positive and maintain 'Buy' rating with DCF based target price of Rs 350.

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