Crompton Greaves Consumer Electricals Ltd is betting on premiumization and expansion into new categories to drive the next leg of growth. It is eyeing a 13-14% compound annual growth rate (CAGR) in revenue over FY26-29 and doubling revenue from ₹8,100 crore in FY26 by FY31.
At its recent Investor Day, the management said Ebitda margin is expected to improve to 11-12% by FY29 from 10.2% in FY26, with further expansion likely by FY31. This will be aided by new product development (NPD)-led growth, distribution boost and operational efficiencies. Ebitda is short for earnings before interest, taxes, depreciation and amortization.
Higher NPD contribution across core categories of fans, large domestic appliances, pumps and business-to-business lighting would buoy market-share gains. NPD intensity has increased, with 211 products launched in FY26 versus 165 in FY24, with the revenue share from new products rising to 17% from 7%.
New category boost
Crompton is expanding its total addressable market (TAM) to ₹1.6 trillion through new categories of wires, solar products, and water purifiers, up from ₹80,000 crore. Revenue from these new businesses is expected to grow to 14-15% over the next three years and subsequently to around 20% by FY31. New businesses should provide diversification and reduce seasonality impact since they are less weather-dependent.
TAM expansion gives incremental growth opportunities beyond the core portfolio, but entry into lower Ebitda margin product categories could make its 12% plus FY31 Ebitda margin target more challenging to achieve, cautions PL Capital.
Smart and connected products (Internet of Things-enabled home appliances designed for remote operation and voice control) should see revenue share expand to 15% over the next three years. Crompton has guided for an annual capex of around ₹120 crore, excluding greenfield capex, versus an average annual capex of ₹90 crore over the last five years.
Nomura Research noted that Crompton’s research and development spend rose to around 1.1% of sales in FY26 from a mere 0.4% in FY22/23, indicating a thrust towards innovation. “While the focus on innovation and premiumization is the right strategy, it needs to be followed up with higher promotions,” Nomura added. Overall, the pace of execution in scaling up of new businesses is critical.
From its 52-week high of ₹337.50 seen in September, the stock is down 26%. Following the 14.2% price increase implemented in the June quarter (Q1FY27) amid input cost inflation, the near-term stock outlook hinges on margin movements. Ebitda margin stood at 10% in Q1FY27.
