Crompton Greaves in pain as Butterfly flutters
₹34 crore but faced a loss of nearly ₹2 crore in the quarter ended December (Q3FY24). Weak corporate sales was only partly offset by the healthy traction in the retail and e-commerce channels in Q3. Plus, advertising expenses were higher.
Analysts have revised Crompton's earnings forecasts downwards, taking into account Butterfly's performance. “We lower our earnings per share estimates by 7% for FY24E and 4% for FY25E on delay in Butterfly breakeven and continued advertisement expenses dragging margin," said analysts at Elara Securities (India) in a report on 16 February. However, the steady performance across Crompton’s core businesses – electrical consumer durables (ECD) and lighting products – is a bright spot.
The ECD segment has seen notable revenue growth, outpacing peers. For instance, Crompton's revenue in this segment grew 13% year-on-year for the nine-month period ended December, compared to a 1% growth for Havells India Ltd. Crompton's fan category benefited from an increased focus on premium products.
The lighting segment also saw revenue growth in Q3 after many quarters of decline. Also, Crompton has taken price hikes in fans and pumps in February, which would aid Q4 earnings. “While Crompton’s performance has improved in patches, a more consistent and broad-based improvement is required to drive a re-rating of the stock," said analysts at Kotak Institutional Equities in a report on 16 February.
Through its Crompton 2.0 strategy, the company aims to grow faster than the industry average and enhance its premium product portfolio. Investors seem to have taken note of the challenges the company faces . So far in 2024, Crompton’s shares are down by over 7%, while the benchmark Nifty 50 index has gained nearly
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