CROMPTON - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.6

📊 Core Financials

• Revenue & Profitability: PAT declined to 85.3 Cr. from 125 Cr., showing -30.8% quarterly profit variation.
• Margins: Strong ROE at 16.5% and ROCE at 20.1% indicate efficient capital utilization.
• Debt Ratios: Very low debt-to-equity at 0.05 — financially stable with minimal leverage risk.
• Cash Flows: Dividend yield of 1.17% provides shareholder returns alongside reinvestment capacity.

💹 Valuation Indicators

• P/E Ratio: 33.4 vs Industry PE of 49.3 — relatively undervalued compared to peers.
• P/B Ratio: Current Price 256 ₹ / Book Value 56.1 ₹ ≈ 4.56, slightly expensive on book value basis.
• PEG Ratio: -19.3 — negative due to declining earnings growth, caution warranted.
• Intrinsic Value: Fairly valued; price reflects strong fundamentals but earnings pressure persists.

🏢 Business Model & Competitive Advantage

• Operates in consumer electricals (fans, lighting, appliances), with strong brand recognition.
• Competitive advantage lies in wide distribution network and established market share.
• DII holdings increased (+2.31%), showing domestic institutional confidence, though FII reduced (-3.64%).

📈 Technical & Entry Zone

• DMA 50: 273 ₹ | DMA 200: 313 ₹ — stock trading below both averages, indicating weakness.
• RSI: 40.4 — nearing oversold territory.
• MACD: -6.69 — bearish momentum.
• Entry Zone: Attractive near 240–250 ₹ for accumulation.
• Long-Term Holding: Suitable for long-term investors given strong ROE/ROCE and low debt, despite short-term earnings pressure.

✅ Positive

• Strong ROE (16.5%) and ROCE (20.1%) highlight efficient capital use.
• Low debt-to-equity ratio (0.05) ensures financial stability.
• Dividend yield of 1.17% provides consistent shareholder returns.

⚠️ Limitation

• Quarterly profit decline (-30.8%) raises concerns on earnings momentum.
• P/B ratio of 4.56 indicates premium valuation on book value.
• Negative PEG ratio (-19.3) reflects weak growth outlook.

📉 Company Negative News

• Sharp decline in quarterly PAT from 125 Cr. to 85.3 Cr.
• FII holdings reduced by -3.64%, showing reduced foreign investor confidence.

📈 Company Positive News

• DII holdings increased by +2.31%, indicating domestic institutional support.
• Strong operational efficiency with high ROCE and ROE despite earnings pressure.

🏭 Industry

• Industry PE at 49.3 — sector trades at premium valuations.
• Consumer electricals industry benefits from urbanization and rising disposable incomes.

🔎 Conclusion

CROMPTON remains fundamentally strong with excellent return ratios and low debt, though short-term earnings have weakened. Valuation is fair compared to industry peers. Entry is attractive near 240–250 ₹, with potential for long-term holding given strong brand, efficient capital use, and industry growth prospects.