Crompton Greaves shares rise 5% to hit 52-week high on stable outlook

Shares of Crompton Greaves Consumer Electricals (Crompton) hit a 52-week high of Rs 338.15 while rising 5 percent on the BSE during intraday trade on Wednesday in an otherwise subdued market with a stable outlook.

Since April, shares of a consumer and electronics company have risen 27 percent after Crompton said it strengthened its sustainability footprint in the agriculture sector, securing fourth consecutive order for solar water pumping system from HAREDA, Haryana under the PM-KUSUM Scheme .

The order value of Rs 9 crore, approved by New & Renewable Energy Department Haryana and HAREDA, includes supply, installation and commissioning of 7.5 HP DC; 10 HP AC and 10 HP DC solar photovoltaic water pump systems.

The order is part of a larger initiative led by the Solar Energy Corporation of India (SECI) and the Ministry of New and Renewable Energy (MNRE), which aims to replace and install new connections for 0.65 million pumps in all over India. The total orders received by HAREDA so far is Rs 65.6 crore, the company had said.

Crompton had obtained a Letter of Empanelment for 2500 solar pumping systems in Maharashtra from MSEDCL (Maharashtra State Electricity Distribution Co. Ltd) for 500 systems and MEDA (Maharashtra Energy Development Agency) for 2000 systems. Another Letter of Empanelment for 1,000 solar pumping systems in Rajasthan has been received from the Commissionerate of Horticulture, Rajasthan, the company said.

Crompton plans to deploy more than 10,000 solar-powered pumps under the PM-KUSUM program in the coming years, in its efforts to make an impact in the energy efficiency category.

Crompton operates in four key business segments: fans, lighting, pumps and appliances. The consumer electrical durables segment, comprising fans, pumps and appliances, accounted for 84 percent of sales in the first nine months of fiscal 2024, while lighting accounted for 16 percent.

The company posted revenues of Rs 5,352 crore in the first nine months of fiscal 2024, up 5 percent over the corresponding period of the previous fiscal year, despite weak demand, especially from the rural region. And the margin before interest, taxes, depreciation and amortization (EBIDTA) fell from 11 percent to 9.5 percent. Margins were impacted by high promotional spend and weak demand scenario. The green shoots seen in rural demand recovery, cost optimization and recent price hikes will help improve margins, analysts say.

The company has a robust distribution network. The focus on expanding reach in the go-to-market strategy has improved distribution for the fans and LED lamps segments. The well-established brand, broad product portfolio and strong distribution reach have helped it maintain its leading position in the domestic fans and residential pumps segments and capture a significant market share in water heaters, rating agency CRISIL said in support.

Crompton is the fourth largest lighting company in India. The acquisition of Butterfly Gandhimati Appliances will help achieve its long-term strategic objective of becoming a leading player in the appliance segment through a complete portfolio of small kitchen appliances, the rating agency said.

First print: May 8, 2024 | 12:07 pm IST