Crompton growth strengthens as ECD and exports offset lighting margin pressure

Investment View and Valuation

In its October 16, 2026 result update on Crompton Greaves Consumer Electricals, Prabhudas Lilladher said growth momentum strengthened across categories in Q2 FY27. The broker retained its BUY rating and Rs 294 target price, unchanged from earlier, based on 25 times September 2028 earnings.

Prabhudas Lilladher raised its FY28E and FY29E earnings per share estimates by 0.9 per cent and 0.8 per cent respectively, following higher sales estimates.

Q2 FY27 Financial Performance

Segment Performance

Electric Consumer Durables

Electric Consumer Durables revenue grew 19.2 per cent year on year to Rs 16,345 million, while EBIT margin expanded 100 basis points to 11.6 per cent. Growth was supported by a 40 per cent increase in BLDC fans, double-digit growth in residential, agricultural and specialty pumps, and more than 20 per cent growth in small domestic appliances, including induction cooktops, air fryers and mixer grinders.

General trade and rural trade delivered double-digit growth, although e-commerce remained subdued. Water heaters gained market share. Solar pump growth was muted because of lower PM-KUSUM order inflows, though management expects demand could recover under PM-KUSUM 2.0.

Lighting

Lighting revenue rose 14.3 per cent year on year to Rs 2,983 million. Growth was supported by ceiling lights, outdoor lighting and LED battens in business-to-consumer channels, as well as industrial and commercial projects in business-to-business channels.

Lighting EBIT margin fell 260 basis points year on year to 12.9 per cent because of pre-contracted lower-priced orders. Prabhudas Lilladher identified this as a pressure point for another quarter.

Butterfly Products

Butterfly Products revenue grew 16.6 per cent to Rs 3,305 million, driven by pressure cookers, induction cooktops, mixer grinders and electric rice cookers. Butterfly gained market share in mixer grinders, glass cooktops and pressure cookers, although its EBIT margin declined 40 basis points year on year to 7.4 per cent.

Management Commentary and Operating Updates

• Exports grew 70 per cent year on year, led by fans and then pumps, with Africa, the Middle East and South Asia as key markets. Export margins were similar to or slightly below domestic margins.
• The company took cumulative fan price increases of 17 to 18 per cent between January 2026 and September 2026 and indicated that about 80 per cent of cost inflation had been passed through.
• More than 50 per cent of the Andhra Pradesh government solar rooftop order book had been executed.
• The Wires business was extended to Delhi, Punjab and Gujarat.
• Supply-chain disruption seen in Q1 FY27 had normalised, and inventory had been stepped up appropriately.
• Evaluation of a greenfield plant for fans, appliances and wires was at an advanced stage.

Earnings Outlook

Prabhudas Lilladher estimates Crompton's revenue, EBITDA and PAT to grow at CAGRs of 12.9 per cent, 15.0 per cent and 15.5 per cent respectively over FY26 to FY29E.

Key Issues for the Thesis

• The pace of recovery in solar-pump orders.
• The ability to sustain cost pass-through.
• Subdued e-commerce demand.
• The timing of normalisation in Lighting margins.