Margins were affected due to an increase in advertising costs as opposed to the raw material inflation, revenue grew 2% on a QoQ basis | Crompton Greeves Consumer Electricals Q3 FY22 Conference Call Highlights￼3 min read
- Revenue for the quarter at Rs. 1410 crores registered a growth of 7% YoY and 1.8% QoQ (2 Year CAGR: 15%). EBIDTA margins were 14.3% as compared to 14.8 % in the same period last year. PAT was at Rs. 148 crores vs 147 Cr last year. PAT decreased by 12.9% on QoQ basis mainly due to increase in advertisement and promotion costs.
- Input prices remained elevated and were largely offset through a combination of mix improvement, calibrated pricing and cost reduction programs. This enabled the company to maintain its superior margin profile despite doubling its advertising spend during the quarter.
- Fans growth was driven by strong performance in the premium & decorative segments, leading to an all-time high market share. Appliances business continued to deliver robust growth based on excellent consumer offerings in the core categories of water heaters, mixer grinders and irons. B2C LED lighting grew in excess of 20%. Continued to gain market share in Fans (+2.3%). Rural channel continued its superior growth of 198% YoY
- Market Share: Leader in Fans (27%), Water Heater (11%), Lighting (10%). Continued market share gains in geysers. In geysers they are no 2-3 player. Company also has gained the market share in the rural areas albeit on a smaller base. In the fans segment company is increasingly focusing in the premium range.
- ECD (Electrical Consumer Durable) Performance (18% CAGR over Q3 FY20, Fans- 22% CAGR , Appliances- 28% CAGR; ECD 6% growth over last year): Broad based growth across all product lines. Strong performance with a growth of 11% over last year in Fans driven by premium & deco fans. Appliance business continues growth trajectory with 13% Growth over last year driven by core categories Geysers & Irons. Pump business was impacted by industry wide slowdown.
- In the lighting segment there are B2B and B2C areas of operations for Crompton. In B2B, the government related contracts have become virtually zero. While apart from this the B2B segment has grown at a 22% in this quarter. In B2C there is conventional lighting and LED lighting. Conventional is gradually eroding while the LED is gaining momentum. LED growth rate for the quarter was 22%. Company is moving away from conventional lighting and government related legacy projects. Lighting Performance (B2C – 11% CAGR over Q3 FY20). B2C Lighting LED continue to witness healthy value growth of 22% over last year. Lighting B2G business continue to face slow order pick up.
- Water heater is the fastest growing category for the company.
- Pumps saw a slowdown in the last 3 quarters across the industry.
- Ramped up R&D facility of 50,000 square ft in Mumbai. Close to 100 people will be working in the same.
- Secondary sales data improved to 80% in Q3.
- Price hikes have been taken over 4 to 5 times this calendar year and roughly 17-18% has been passed on to the consumers.
- Advertising and sales promotion cost to be around 3% of the sales going forward.
- In the Domestic Small appliances category, Mixers and grinders is the focus area for the company as it has a sizeable demand. Going forward company will look to expand in this category.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell stocks or MF.