Crompton Greaves stock rallies 5%, hits 52-week high on stable outlook

Shares of Crompton Greaves Consumer Electricals (Crompton) hit a 52-week high of Rs 338.15, as they rallied 5 per cent on the BSE in Wednesday’s intra-day trade in otherwise subdued market on stable outlook.

Since April, the stock of consumer electrical and electronics company has rallied 27 per cent after Crompton said it strengthen its sustainability footprint in the agricultural sector, securing its fourth consecutive order for solar water pumping system from HAREDA, Haryana under PM-KUSUM Scheme.

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

The order is part of a larger initiative led by the Solar Energy Corporation of India (SECI) and the Ministry of New & Renewable Energy (MNRE), aiming to replace and establish new connections for 0.65 million pumps across India. Total orders accrued till now from HAREDA stands at Rs 65.6 crore, the company had said.

Crompton had secured 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 has been received for 1000 solar pumping systems in Rajasthan from Commissionerate of Horticulture, Rajasthan, the company said.

Crompton aims to deploy over 10,000 solar powered pumps under the PM-KUSUM Scheme in the next few 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 electric consumer durables segment, comprising fans, pumps and appliances, accounted for 84 per cent of the revenue in the first nine months of fiscal 2024, while lighting constituted 16 per cent.

The company achieved revenue of Rs 5,352 crore in the first nine months of fiscal 2024, an increase of 5 per cent over the corresponding period of the previous fiscal, despite subdued demand specially from rural region. And the earnings before interest, tax, depreciation and amortisation (EBIDTA) margin declined to 9.5 per cent from 11 per cent.  Margins were impacted due to high promotional spending and weak demand scenario. The green shoots seen in rural demand recovery, cost optimisation and recent price hikes will help improve margins, according to analysts.

The company has a robust distribution network. Focus on expanding reach in go-to-market strategy has improved the distribution for the fans and LED bulbs segments. Established brand, wide product portfolio and strong distribution reach have helped maintain leading position in the domestic fans and residential pumps segments and gain significant share in water heaters, the rating agency CRISIL said in rationale.

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