CROMPTON - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 3.9

📊 Core Financials

Earnings & Profitability: EPS of ₹8.24 and PAT of ₹125 Cr (down 20.6% QoQ) indicate a dip in profitability. However, ROCE at 20.1% and ROE at 16.5% remain solid, reflecting decent capital efficiency.

Debt Profile: Debt-to-equity of 0.13 — low leverage, which supports financial resilience.

Cash Flow: While not explicitly stated, the company’s low debt and consistent margins suggest stable operating cash flows.

💰 Valuation Indicators

Metric Value Insight

P/E Ratio 38.5 Reasonable vs. industry PE (56.6)

P/B Ratio ~5.66 Premium over book value

PEG Ratio -22.2 Negative PEG suggests earnings contraction

Dividend Yield 0.95% Modest, adds to shareholder value

Valuation is fair relative to peers, but the negative PEG ratio flags caution due to weak earnings growth.

🧩 Business Model & Competitive Advantage

Crompton Greaves Consumer Electricals Ltd. is a leading FMEG (Fast-Moving Electrical Goods) company with a strong presence in

Fans, pumps, and appliances (76% of revenue)

Lighting products (13% of revenue)

Strategic stake in Butterfly Gandhimathi for kitchen appliances

Key strengths include

Dominant market share in fans and pumps (25%+)

Deep distribution network with 2,800+ distributors and 236,000+ retail touchpoints

Expansion into solar pumps and rooftop solutions

Investment in platforms like Nucleus and Xtech to drive innovation

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Despite margin pressure in lighting, the company is improving product mix and focusing on B2B channels to stabilize profitability

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📈 Technical & Sentiment Indicators

RSI: 41.8 – Near oversold territory, suggesting potential rebound.

MACD: -3.66 – Bearish crossover, indicating short-term weakness.

Volume Dip – Below weekly average, signaling reduced interest.

DMA 50 & 200: Price is below both, confirming bearish undertone.

💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹305–₹320, near recent support and RSI oversold zone.

Current Price ₹317: Within accumulation zone for long-term investors.

🕰️ Long-Term Holding

Hold or Accumulate on Dips: Strong brand, low debt, and diversified product base make it a stable long-term play.

Watch Earnings Recovery & Institutional Sentiment: FII outflow (−1.13%) and recent PAT dip suggest short-term caution, but DII inflow (+1.88%) reflects domestic confidence.

For deeper insights, check out Simply Wall St’s earnings outlook and ICICI Direct’s investment rationale and target.

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www.icicidirect.com

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