Key Takeaway: Crompton’s FY21 AR information its 5-point approach, new launches, a number of initiatives (price manage, distribution) and development catalysts. FY21 saw price saving worth Rs 1.53bn. CROMPTON additional streamlined its Go-To-Market, and doubled retailers attain. 80% of its secondary sales can now be tracked, New launches are largely premium in nature, which could drive the next leg of development. Factoring upside from these, we raise FY22-24e EPS by +4%. Retain Buy PT of Rs 530.
Strategy Outlook: CROMPTON has delivered superior execution, with FY19-21 EPS CAGR at +23%, outpacing peers. The enterprise is embarking on a 5-dimensional development approach for strengthening its Brand, Portfolio, Go-To-Market Reach, Operational and Organizational focus. Also, its price manage system ‘Project Unnati’ has garnered savings of Rs 1.53bn in FY21 through item design and style optimization, in-property manufacturing and industrial negotiations. In FY22, CROMPTON envisages price saving worth Rs 1.75bn. Over FY20-24e, we count on CROMPTON to post +14% PAT CAGR, aided by +230bps margin expansion, driven by premiumization, price manage, possible shr gains, launches, GTM and a sturdy B/S.
Catalysts: CROMPTON’s important items are Fans, Pumps, Appliances and Lighting. 1) Fans demand is probably to be underpinned by Rural electrification and increase in Housing. PMAY scheme aims to construct 20 mn very affordable homes in urban by 2022. 2) BEE could enforce new power labeling norms from Jan’22 – this is intended to lessen power consumption of appliances and reduced its carbon footprint, without the need of diminishing service top quality. This could increase demand for power-effective items. 3) Govt’s aim of giving drinking water to all by 2024 could drive Pumps demand.
Launches: FY21 saw lots of new launches across categories, mostly premium, aiding margins. Buy: CROMPTON’s FY21 AR information its a number of launches (mostly premium) and several initiatives, eg, price manage, distribution and so forth. Factoring upside from these, we raise FY22-24e EPS by +4%. Reiterate Buy with revised PT of Rs 530 (vs Rs 490). Retain target PE at 45x. Key Risks: Demand slowdown, RM volatility and pricing pressures.