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Motilal Oswal sees 35% upside in Crompton Consumer, reiterates Buy
Our read
Crompton's 35% implied upside depends less on a one-quarter demand rebound and more on sustained premiumisation translating into structurally higher margins and faster PAT growth than the market currently prices.
For operators
Crompton’s premiumisation and margin initiatives are central to the growth case, with Motilal Oswal projecting FY26–28 EBITDA CAGR of about 18%.
Watch
Fan and pump demand acceleration during the peak summer season.
The report,
Motilal Oswal reiterated Buy on Crompton Greaves Consumer Electricals with a Rs 340 target, implying 35% upside. It expects revenue, EBITDA and PAT growth through FY28, aided by premiumisation, improved Butterfly, lighting and ECD margins, and continued brand investment.
Newer report , , Business Today : Crompton targets revenue doubling by FY31 as Elara sees 67% upside
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Reported figures
From the report. Source details below
| Current market price: | Rs 252 |
|---|---|
| FY26-28 revenue CAGR: | ~13% |
| FY26-28 EBITDA CAGR: | ~18% |
| FY26-28 PAT CAGR: | ~21% |
| Operating profit margin: | ~11% by FY28 versus ~10% in FY26 |
| Valuation: | 27x FY27E EPS and 22x FY28E EPS |
| Net cash: | Rs 180 crore in FY26 |
| Annual free cash flow: | Rs 650 crore+ over FY24-26 |
Also in the report
- Buy rating
Why it matters to operators and investors
The outlook reinforces the strategic value of premium product expansion and margin-accretive portfolio moves in consumer durables, where Crompton is expected to outgrow earnings through FY28.
What to watch next
- Sequential improvement in premium-product mix and realization growth.
- EBITDA margin expansion exceeding expectations despite promotional activity.
- Commodity-price movements in copper, aluminium, steel and plastics.
- Rural consumption recovery, monsoon quality and farm-income trends.
- Any deterioration in channel inventory, receivable days or dealer-led discounting.
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- Quarterly earnings upgrades or downgrades relative to the 13% revenue and 18% EBITDA CAGR assumptions.
Likely next moves
Our read of what comes next — analysis, not reported by the source.
- Track quarterly volume growth in fans, pumps and small appliances versus category demand.
- Monitor gross-margin and EBITDA-margin progression for evidence of premium mix and cost savings.
- Watch management commentary on channel inventory, dealer incentives and competitive pricing.
- Compare summer-season demand trends with weather conditions, rural income indicators and housing-sector activity.
- Assess whether analyst earnings revisions begin to validate the projected FY26-28 PAT CAGR of about 21%.
The counter-case
The case against this reading — not reported by the source.
The 35% upside rests on aggressive earnings delivery: FY26–28 EBITDA and PAT growth of 18% and 21% requires sustained premiumisation, operating leverage and margin expansion despite potentially weak discretionary demand, elevated competitive intensity in fans, appliances and lighting, and volatile input costs. A slowdown in housing/consumer spending, price-led competition, or higher advertising and distribution costs could limit margin gains and make the target multiple difficult to sustain.
The source
First seen