Crompton Greaves Stock Dips 3% Despite Strong Q1 Profit

Crompton Greaves Consumer Electricals Ltd. shares declined over 3% today, despite the company reporting robust double-digit profit and revenue growth for the June quarter. This market reaction occurred even as operating margins significantly expanded year-over-year.

For the June quarter, the company’s net profit surged 14.8% to Rs 140 crore, with revenue climbing 16.9% to Rs 2,335 crore. Operating performance showed marked improvement, with Ebitda increasing 65.7% to Rs 325 crore.

The Ebitda margin expanded notably to 13.9%, up from 9.8% in the same period last year. This operational boost was primarily attributed to timely price increases and stringent cost control measures implemented by the company.

However, the company noted that persistent supply constraints adversely impacted sales throughout the quarter. Despite these challenges, the underlying financial improvements were substantial.

Brokerage Perspectives and Outlook

Leading brokerages, Jefferies and Citi, both reiterated their ‘buy’ ratings for Crompton Greaves following the results. Jefferies maintained a target price of Rs 330 per share.

Jefferies analysts noted that the company’s performance aligned with their expectations, driven by effective price adjustments and efficient working capital management. Citi, meanwhile, set a higher target price of Rs 400 for the stock.

Citi suggested that the reported supply constraints likely masked even stronger underlying growth potential. The brokerage anticipates near-term benefits from a recovery in sales, a favorable comparative base, and the introduction of new product categories.

However, Citi also highlighted that execution remains a critical factor to monitor, especially given the ongoing volatility in raw material prices and potential supply chain disruptions. Investors will watch for how the company navigates these external pressures.