5 reasons Motilal Oswal initiates coverage on Crompton Greaves with 'Buy'

Domestic brokerage Motilal Oswal has initiated coverage on Crompton Greaves Consumer Electricals with a ‘Buy’ rating, citing a multi-year transformation that could unlock stronger growth and profitability. 

 

The brokerage has set a target price of ₹350, implying nearly 40 per cent upside, as it sees Crompton transitioning from a traditional electricals company to a more brand-led, innovation-focused consumer player under its Crompton 2.0 strategy.

 

On the bourses, Crompton Greaves share price rose as much as 3.97 per cent to hit an intraday high of ₹259.20 per share. 

 

Around 10:30 AM, Crompton Greaves share price was trading 3.69 per cent higher at ₹258.50 per share. By comparison, BSE Sensex was trading flat with a positive bias at 84,585.43 levels.

 

 

Meanwhile, here are five reasons behind initiating coverage on Crompton Greaves:

 

Leadership across core electrical categories

 

According to Motilal Oswal analysts, Crompton enters this transition phase from a position of strength. It is the market leader in fans with around 25 per cent market share and a manufacturing capacity of 1.6 million units per month. The company also dominates the residential pumps segment with nearly 30 per cent market share, supported by a capacity of about 49,700 units per month.

 

In lighting, Crompton ranks among the top three players, backed by a manufacturing capacity of 5.6 million units per month and a growing presence across both B2B and B2C segments. According to channel checks cited by Motilal Oswal, customers associate the Crompton brand with durability, efficiency and strong after-sales service, reinforcing its competitive position across categories.  CATCH STOCK MARKET LIVE UPDATES TODAY

Butterfly acquisition expands appliances opportunity

 

Crompton’s acquisition of a majority stake in Butterfly Gandhimathi Appliances has significantly strengthened its appliances portfolio. The company currently holds a 75 per cent stake in Butterfly, one of India’s largest integrated kitchen appliance manufacturers. Butterfly has a strong leadership position in South India, particularly in wet grinders and LPG stoves, supported by brand recall, technical capabilities and a solid e-commerce presence.

 

While Butterfly’s revenue declined about 7 per cent year-on-year in FY25 to ₹860 crore, this followed strategic initiatives aimed at business revival and profitability improvement. Motilal Oswal expects Butterfly’s contribution to Crompton’s consolidated revenue to rise to around 12 per cent over FY26-28, with revenue and Ebitda growth accelerating as synergies are realised.

 

Crompton 2.0 signals strategic reset

 

Launched in June 2023, Crompton 2.0 marks a renewed focus on revenue growth as a driver of profitability, analysts said. The strategy is built around four pillars, which include strengthening the core portfolio, winning in the kitchen segment, transforming the lighting business, and entering new categories.

 

Execution is being supported by investments in people and processes, organisational development, digital enablement, consumer-led innovation and improved go-to-market capabilities. Analysts at Motilal Oswal believe this strategic reset positions Crompton to accelerate growth while improving margins through portfolio premiumisation and better operational efficiency.

 

Brand investments to support scale and premiumisation

 

Crompton has stepped up spending on advertising and promotions to enhance brand visibility across its product portfolio. A greater share of this investment is being directed towards digital platforms, reflecting changing consumer behaviour and higher engagement on social media.

 

The brokerage notes that stronger brand salience should help drive consideration and preference, particularly among younger consumers. While higher advertising spends may weigh on margins in the near term, Motilal Oswal expects these investments to support volume growth, improved mix and stronger pricing power over time.

 

Earnings recovery and valuation comfort

 

Motilal Oswal factors in a dip in earnings in FY26, largely due to weather-related disruptions that impacted the electrical consumer durables segment. Beyond this, it expects a clear improvement in both earnings and return ratios.

 

The brokerage estimates revenue CAGR of about 8 per cent over FY26-28, with Ebitda and PAT growing at 17 per cent and 21 per cent CAGR, respectively. Operating margins are projected to rise to 10.3 per cent in FY27 and 11.2 per cent in FY28, compared with 9.7 per cent in FY26.

 

Crompton has historically traded at an average P/E of 35x, and Motilal Oswal applies this multiple to December 2027 earnings to arrive at its ₹350 target price, supporting its bullish stance despite risks from competition and demand slowdown.   

Disclaimer: The stock target/outlook has been suggested by Motilal Oswal. Views expressed are their own.