Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Crompton Greaves Consumer Electricals Ltd (BOM:539876, Financial) reported double-digit revenue growth for the fifth consecutive quarter, with standalone revenues increasing by 11% in Q2 FY25.
- The company's ECD business saw robust growth, with appliances growing at 26% YoY and pumps at 20% YoY.
- The lighting segment showed improvement, with revenue growth of 6% YoY and margin strengthening, driven by non-conventional lighting products.
- The company has successfully executed pricing actions and maintained strong EBIT margins, with a 60 basis point improvement to 9.7% despite increased A&P spending.
- Crompton Greaves Consumer Electricals Ltd (BOM:539876) has been proactive in regulatory compliance, completing BIS transitions in a timely manner, which positions them well in the market.
Negative Points
- The fans segment, while growing, only saw a 5% increase in revenue, indicating potential challenges in maintaining higher growth rates.
- There is competitive pressure in the market, with some competitors delaying price hikes, which could impact Crompton's pricing strategy.
- The company faces headwinds from weather disturbances and a delayed agricultural season, affecting certain segments like pumps.
- Despite improvements, the lighting segment's growth is still relatively modest at 6% YoY, suggesting room for further enhancement.
- Butterfly Gandhimathi Appliances, a subsidiary, is undergoing a business refresh, which may temporarily impact revenue growth as the company focuses on stabilizing fundamentals.
Q & A Highlights
Q: Can you elaborate on the margin improvement in the fans segment? Is it driven by an increase in the share of premium fans?
A: The margin improvement is due to a combination of factors, including price increases, new product development (NPD), and premium offerings. The share of premium fans remains at a similar level, but we have consistently taken price increases, which some competitors have delayed.
Q: How has the pump business performed, and have you gained market share?
A: The pump business grew by 20%, with significant contributions from solar and residential pumps. We believe we have gained market share, particularly in solar pumps, where we executed orders worth INR42 crore last quarter and have crossed INR100 crore in sales this year.
Q: What is the outlook for the fans segment for the rest of the year?
A: We expect moderate growth in the fans segment for the rest of the year. We are focusing on introducing new products and strengthening our non-ceiling fans category to sustain growth and profitability.
Q: Can you provide insights into the lighting segment's growth and future prospects?
A: The lighting segment has seen growth driven by outdoor and accessory products, now accounting for 50% of the portfolio. We expect further growth with new product launches, particularly in decorative panels and outdoor lighting.
Q: How are Crompton and Butterfly leveraging synergies in the kitchen appliances segment?
A: Crompton and Butterfly have a combined market leadership in mixer grinders. While Butterfly operates independently in the South, Crompton has a national presence. We are leveraging each other's strengths, with Butterfly manufacturing supporting Crompton's product offerings.
Q: What is the strategy for the solar pumps business, and how do you see its growth?
A: The solar pumps business is tender-based, and we partner with others for projects. Crompton's reputation for quality pumps helps us win tenders. We are optimistic about the growth potential in this segment over the next few years.
Q: How is the demand outlook for the festive season and kitchen appliances?
A: The festive season has shown positive demand trends, particularly in kitchen appliances like gas and pressure cookers. Overall, the demand outlook is moderate, but we are focusing on growing specific segments to bolster revenue.
Q: Are there any challenges in sourcing solar panels for the solar pumps business?
A: We have not faced significant challenges in sourcing solar panels. Our focus remains on maintaining a strong supply chain to support the growth of our solar pumps business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
