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Motilal Oswal Report
Competitive intensity has bottomed out in the lighting industry, though not completely over.
This can be gauged by the price hikes over the past six months. The last round of price cuts occurred in August 2019 and will form part of the base September 2020 onwards.
Thus, we expect Crompton Greaves Consumer Electricals Ltd. growth in the lighting segment to follow volume growth while margins should be on an uptrend Q2 FY21 onwards (full quarter impact expected to reflect in Q3 FY21 only).
Crompton Greaves’ business model is most resilient in times of a crisis.
The company showcased best performance in Q1 FY21 with Ebitda decline of approximately 49% (versus decline of approximately 80% for our aggregate universe).
Since Crompton Greaves’ categories have higher replacement demand, we see higher probability of steady performance in the coming quarters and in FY22E (versus negative impact for peers from weak consumer demand).
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