JPMorgan Adjusts Crompton Consumer Target Amid Growth Ambitions
By ThePip Desk
JPMorgan revises Crompton Consumer’s target price to Rs 290, highlighting execution risks despite ambitious 13-14% revenue CAGR goals through FY29.
Crompton Consumer Electricals Ltd. saw its target price reduced by JPMorgan to Rs 290 from Rs 307. This adjustment comes despite the company’s projected 13-14% revenue Compound Annual Growth Rate (CAGR) until FY29.
JPMorgan underscored that the successful execution of these ambitious targets would be critical for Crompton Consumer. Conversely, Jefferies and Citi maintained their ‘Buy’ ratings on the stock, citing factors such as premiumisation and the introduction of new business segments.
Growth Initiatives and Market Expansion
The new business segments include wires and solar rooftop, contributing to an expanded addressable market. The total addressable market is expected to grow to Rs 2 lakh crore with the inclusion of wires, while the solar rooftop market is projected to double by FY29.
Crompton aims for these new ventures to contribute at least 20% of its total turnover. The company also projects to double its overall revenue by FY31 and anticipates its EBITDA margins to surpass 12% by the same year.
Strategic Investments and Operational Focus
Other initiatives supporting the business involve premiumisation in fans and increased adoption of BLDC fans. A strategic reduction in reliance on weather-dependent categories also forms part of its operational improvements.
A new greenfield plant, costing Rs 350 crore, is slated for construction in Q4 FY27 to enhance capacity and improve margins. These investments underscore Crompton’s commitment to achieving its long-term financial and market objectives.