Kotak Institutional Equities has issued a BUY recommendation on Crompton Greaves Consumer, setting a fair value target of Rs410 per share, representing a potential upside from the current market price of Rs355. The research underscores Crompton’s ambitious transformation, driven by market expansion, strategic pivots to consumer-centricity, and operational overhauls. Key catalysts include the company’s aggressive foray into solar pumps and rooftops, organizational restructuring, and a renewed focus on brand and distribution. Crompton aims to double its topline over five years and expand EBITDA margins to 12–12.5%, leveraging its trusted brand and diversified product portfolio. Investors are advised to consider Crompton as a compelling long-term play in India’s consumer durables sector, with robust growth levers and margin expansion prospects.

Research House Recommendation and Investment Thesis

Kotak Institutional Equities reiterates a BUY call on Crompton Greaves Consumer, with a revised fair value of Rs410 per share, underpinned by higher long-term growth assumptions and a 32x June 2027E EPS multiple.
The report’s bullish stance is anchored in Crompton’s strategic initiatives to expand its addressable market, diversify revenue streams, and enhance operational efficiency. The stock is currently trading at Rs355, offering a substantial upside to the target price. The sector view remains cautious, but Crompton’s differentiated strategy positions it as a standout within the consumer durables landscape.

Expanding Addressable Market: From Rs1 Trillion to Rs2 Trillion

Crompton is poised to double its total addressable market (TAM) to Rs2 trillion by March 2026, driven by new category entries and aggressive expansion into solar pumps and rooftops.
The core market (fans, pumps, lighting, and LDA) is valued at Rs600–700 billion, with kitchen appliances contributing another Rs300 billion.

Solar pumps and rooftops represent a Rs500–600 billion opportunity, and management plans to add 2–3 new categories by FY2026E.

This TAM expansion is critical, given high penetration in legacy categories, and leverages Crompton’s brand equity, distribution, and consumer trust.

Pivot to Consumer-Centricity and Organizational Transformation

The company has shifted from a manufacturing-led to a consumer-oriented approach, marked by high-profile hires and a brand refresh for Butterfly, its kitchen appliances subsidiary.
New leadership includes professionals from Amazon, Reckitt, ITC, Tata Consumer, Symphony, Preethi, Philips India, and Unilever.

The organizational structure has been realigned to prioritize consumer insights, innovation, and agility.

Butterfly has unveiled a new identity and logo, signaling a sharper focus on evolving consumer preferences.

Distribution and Supply Chain Overhaul

Crompton is revamping its go-to-market (GTM) strategy and supply chain, hiring an ex-Unilever executive and engaging Bain Consulting to optimize distribution and range selling.
The company boasts the widest distribution in durables (300,000 outlets) but seeks to improve range selling, especially in categories like geysers.

Supply chain transformation involves augmenting captive capacity for critical components (fans) and outsourcing others (lighting/LDA) for efficiency.

A Rs3.5 billion capex is underway to establish the world’s largest fans factory, with future integration of additional categories.

Revenue and Margin Growth Trajectory

Crompton targets doubling its topline to Rs150 billion in five years, with EBITDA margin expansion to 12–12.5%.
Core segments (fans, pumps, lighting) are expected to grow in line with the market (high single digits).

Emerging businesses (geysers, coolers, kitchen) are projected to double, driven by penetration gains and distribution improvements.

New ventures (solar pumps, rooftops) are set to contribute Rs20–25 billion in incremental revenue.

Solar pumps business, already at Rs2 billion in 18 months, is forecast to double in FY2026E and scale to Rs8–10 billion in 3–4 years.

Margin expansion will be supported by cost optimization, increased A&P/R&D investments, and a mix shift toward higher-margin categories.

Financial Snapshot and Valuation Metrics

Key financial metrics highlight robust growth, improving profitability, and attractive valuation multiples.[1]

Strategic Initiatives and Market Positioning

Crompton is consolidating its leadership in fans and pumps, targeting top-three status in lighting, geysers, and coolers, while aggressively scaling its kitchen appliances business.
The company is #1 in fans, #1 in pumps, and #3 in lighting.

In kitchen appliances (including Butterfly), Crompton is the largest player in mixer grinders and aims to become #1 in the overall kitchen segment within 4–5 years.

The solar rooftop business leverages strong brand recall, with a unique payback proposition for consumers and negative working capital dynamics.

Risks and Key Considerations

Raw material volatility, regulatory changes, and competitive intensity are notable risks, but Crompton’s diversified strategy and brand strength provide significant mitigation.
Key raw materials include copper, aluminum, and ABS; innovation and alternate materials could reduce future cost pressures.

Regulatory-driven price hikes (BEE norms) may impact margins, but Crompton’s scale and cost initiatives offer resilience.

The company maintains a prudent approach to M&A, focusing on organic growth and employee ownership to drive long-term value.

Stock Levels and Investor Targets

Current Market Price (CMP): Rs355
Fair Value Target: Rs410
52-Week Range: Rs301–484
Recommended Action: BUY
Investment Horizon: 12 months+

Crompton as a Long-Term Compounder

Crompton Greaves Consumer stands at an inflection point, with a bold vision to double its addressable market, deepen consumer engagement, and drive operational excellence. Backed by a credible management team, robust brand equity, and a clear roadmap for growth and margin expansion, the stock offers a compelling investment case for long-term investors seeking exposure to India’s evolving consumption story. With a BUY rating and a fair value target of Rs410, Crompton is well-positioned to deliver superior returns as it capitalizes on emerging opportunities in consumer durables and renewable energy.