Crompton Greaves Consumer Electricals targets margin expansion through premium products and new categories

Investment View and Growth Ambition

Motilal Oswal Financial Services Limited (MOFSL), in its August 20, 2026 company update following Crompton Greaves Consumer Electricals' Investor Day 2026, reiterates its Buy recommendation. The view is supported by premiumisation, new product development, distribution expansion, new businesses and supply-chain-led efficiency gains.

Management is targeting revenue CAGR of around 13-14% through FY29 and aims to double revenue by FY31. It is also targeting EBITDA margin of around 11-12% by FY29 and over 12% by FY31, with new businesses expected to contribute around 20% of revenue by FY31.

Crompton 2.0 and New Product Expansion

Crompton's stated strategy, branded Crompton 2.0, is built around four priorities:

• Protect and grow the core categories of fans, pumps and large domestic appliances.
• Build a stronger position in kitchen appliances through Butterfly.
• Transform the lighting business.
• Build businesses in solar and wires.

The company has expanded its addressable market from around Rs 80,000 crore in core categories to around Rs 1,60,000 crore by entering adjacent spaces such as solar, wires and water purifiers.

New-product revenue more than doubled to Rs 1,440 crore in FY26 from Rs 660 crore in FY24, increasing its contribution to revenue to around 17% from 7%. Crompton launched 211 products in FY26 versus 165 in FY24. Smart and connected products contributed 19% of the portfolio in FY26, compared with around 6% in FY24.

Distribution, Channels and Seasonality

Crompton is leveraging a distribution and service network of around 250,000 retailers and 1,300 service partners. General trade accounts for around 66% of sales, while B2G contributes around 5% and alternate channels contribute 29%.

Management plans to deepen distribution in towns with populations of 10,000 to 100,000, progressively access smaller towns, expand quick-commerce availability and premiumise through modern trade. Seasonal products now account for around 20% of sales versus around 42% earlier, reducing the company's seasonality.

Core Category Opportunities

Fans

Premium fans, including BLDC and premium induction products, represented around 25% of FY26 sales and are targeted to reach 30% by FY31. Crompton plans to establish a Rs 350 crore greenfield fan facility. Land acquisition is targeted for Q4 FY27, construction for Q2 FY28 and Phase 1 production for Q1 FY29.

Pumps

Crompton remains the number-one player in pumps and is targeting a further 2.5 percentage point market-share gain by FY31. Growth is expected to be supported by smart pumps, BEE norms, government schemes and service-led bundled solutions.

Small Domestic Appliances and Butterfly

Revenue and volumes in small domestic appliances roughly doubled during FY23-26. Butterfly's EBITDA margin improved to around 8.5% in FY26 from around 2.9% in FY24, and the company aims to double the business over the next few years.

Q1 FY27 Performance and Margin Outlook

Reported Q1 FY27 performance was strong despite commodity inflation and temporary supply disruptions. Revenue, EBITDA and PAT rose around 12%, 17% and 15% year on year, respectively. Operating margin expanded by 40 basis points year on year to around 10%.

MOFSL expects operating margin to expand to around 11% in FY28 from around 10% in FY26. Investments in research and development, advertising and organisational capabilities weighed on overall margin in FY26, although margins in Butterfly, Lighting and ECD improved through premiumisation.

Crompton had net cash of Rs 180 crore in FY26 and generated annual free cash flow of over Rs 650 crore during FY24-26.

Valuation and Key Risks

MOFSL values Crompton at 30 times FY28E EPS to derive a target price of Rs 340. The broker considers the stock inexpensive at 27 times FY27E EPS and 22 times FY28E EPS.

Key factors relevant to the investment thesis include execution in the early-stage wires and solar businesses, where service capability is important; higher advertising and promotional investment; commodity inflation; supply disruptions; and delivery of the planned capacity and margin improvements.