CROMPTON - Crompton Gr. Con

📊 NSE: CROMPTON 🏢 Electric Equipment 📅 Last Updated: 12/13/2025 21:15

💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue from operations grew 7.53% YoY to INR 7,863.55 Cr in FY25. Lighting segment demonstrated 3.1% YoY growth with a 50% YoY increase in EBIT. The Butterfly kitchen business saw EBITDA growth of 21%, while the Crompton kitchen business grew at a comparable or slightly higher rate. However, Q2 FY26 net sales showed a slight decline of 0.8% YoY to INR 1,632 Cr due to unfavorable weather impacting seasonal categories.

Geographic Revenue Split

The company reported growth in its export business during FY25, though specific regional percentage splits are not disclosed. Domestic operations remain the primary driver, with a focus on expanding the global footprint to reach new consumers.

Profitability Margins

Consolidated Net Profit Margin improved to 7.17% in FY25 from 6.04% in FY24. Standalone Operating Profit Margin stood at 10.78% for FY25. However, Q2 FY26 margins faced pressure, with Adjusted Net Profit margin at 5.2% compared to 7.5% YoY, primarily due to higher material costs and transformation expenses.

EBITDA Margin

Consolidated EBITDA margin for Q2 FY26 stood at 8.0%, a decline from 11.0% in Q2 FY25. This 300 bps compression was driven by adverse product mix in the Electrical Consumer Durables (ECD) segment and increased investments in brand building and digital transformation (Crompton 2.0).

Capital Expenditure

The company maintains a modest capex policy, with annual cash accruals of INR 500-600 Cr being sufficient to cover debt obligations and planned capital expenditure. Specific historical INR Cr figures for FY25 capex were not explicitly detailed, but liquidity remains strong with cash equivalents of INR 543 Cr as of September 2024.

Credit Rating & Borrowing

CRISIL maintains a 'Stable' outlook with high credit ratings. The company has a term debt of INR 300 Cr in the form of NCDs scheduled for repayment in July 2025. Interest coverage ratio for FY25 was 10.77, reflecting a robust ability to service debt despite a decrease from 27.01 in the previous year.

⚙️ Operational Drivers

Raw Materials

Key raw materials include commodities used in electrical goods (steel, copper, and aluminum), with total material costs accounting for 67.06% of revenue (INR 5,273.33 Cr) in FY25, up from 68.38% in FY24.

Import Sources

Not specifically disclosed in the documents, though global supply chain risks and China's inflation rates (forecasted at 4.6% in 2025) are monitored as they impact input costs.

Capacity Expansion

The company is undergoing a manufacturing transformation, including the restructuring of the Baroda plant (incurring a one-time cost of INR 20.36 Cr) to optimize the production model and achieve higher economies of scale.

Raw Material Costs

Material costs as a percentage of net sales were 69.7% in Q2 FY26, compared to 68.1% in Q2 FY25. This 160 bps increase was driven by commodity price movements and an adverse mix of seasonal products.

Manufacturing Efficiency

The company is shifting towards a more efficient production model to achieve economies of scale. Inventory turnover ratio (on COGS) was 6.70 in FY25, slightly down from 6.48 in FY24.

Logistics & Distribution

The company is investing in Go-To-Market (GTM) processes and digital transformation to enhance distribution efficiency, though specific logistics costs as a % of revenue were not provided.

📈 Strategic Growth

Expected Growth Rate

10-12%

Growth Strategy

Growth will be driven by the 'Crompton 2.0' transformation, focusing on brand building, GTM excellence, and digital acceleration. The company is expanding into high-growth segments like Solar Rooftop (INR 500 Cr order book) and BLDC fans, while leveraging the Butterfly acquisition to scale the kitchen appliances vertical.

Products & Services

Fans (Ceiling, TPW, BLDC), LED Lighting, Pumps, Solar Water Pumps, Solar Rooftop systems, and Kitchen Appliances (Mixer Grinders, Cooktops).

Brand Portfolio

Crompton, Butterfly.

New Products/Services

Significant focus on BLDC fans and Solar Rooftop solutions. The Solar Rooftop business has an order book of INR 500 Cr executable over 6-12 months.

Market Expansion

The company is gaining market share in fans and pumps despite difficult market conditions. It is also expanding its presence in the premium kitchen segment through the Butterfly brand.

Market Share & Ranking

Crompton maintains market leadership in fans and residential pumps. It is a top player in the LED lighting segment with a 15.5% EBIT margin.

🌍 External Factors

Industry Trends

The industry is shifting toward energy-efficient products due to regulatory changes like the BEE transition (effective Jan 1, 2026). There is a growing trend toward BLDC technology in fans and solar-powered consumer solutions.

Competitive Landscape

Faces intense competition in the kitchen and lighting segments, which has historically limited pricing flexibility and necessitated high promotional spending.

Competitive Moat

Crompton's moat is built on its strong brand legacy, a vast distribution network (GTM excellence), and market leadership in core categories like fans. These are sustained through continuous R&D and high-decibel marketing (A&P spend was INR 305.75 Cr in FY25).

Macro Economic Sensitivity

Sensitive to rural demand recovery and inflation. China's 4.6% growth forecast and global fiscal packages are noted as factors influencing the broader economic environment.

Consumer Behavior

Shift toward premium and energy-efficient appliances (BLDC fans) and increasing adoption of solar energy solutions for residential use.

Geopolitical Risks

Geopolitical tensions are identified as risks that could impact supply chains, global trade, and investment flows.

⚖️ Regulatory & Governance

Industry Regulations

Mandatory BEE (Bureau of Energy Efficiency) star labeling transition for fans effective January 1, 2026, which impacts inventory planning and manufacturing standards.

Environmental Compliance

The company is focused on creating products with reduced environmental impact throughout their lifecycle and adheres to ESG profiles supported by CRISIL.

Taxation Policy Impact

Effective tax rate for FY25 was approximately 25.4% (INR 192.13 Cr tax on INR 756.21 Cr PBT).

⚠️ Risk Analysis

Key Uncertainties

Commodity price volatility (copper/steel) and unfavorable weather patterns pose a 2-3% risk to operating margins. The success of the 'Crompton 2.0' transformation is critical for long-term returns on current high investments.