Motilal Oswal: Crompton Greaves Strong Free Cash Flow, Balance Sheet To Support In Current Times
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Motilal Oswal Report
Crompton Greaves Consumer Electricals Ltd.’s FY20 annual report focuses on a five-dimensional growth strategy and various cost rationalisation measures that have yielded satisfactory results.
The launch of newer products and a deepening reach within the current product portfolio were among the key focus areas for the year gone by.
Under Project Unnati, Crompton saw cost savings worth Rs 1.4 billion (approximately 3.2% of FY20 sales). Savings were reported across areas such as design optimization, in-house manufacturing, backward integration, and advertisement spend. These savings have been pumped back into the business, into domains such as innovation, design, and technology.
Even amid the ongoing Covid-19 disruption, we commend Crompton’s efforts to further improve its leadership position in the Fans segment and its good start in the new Water Heaters and Air Coolers categories. Crompton’s strong free cash flow (FCF) generation is under-appreciated at current valuations, in our view.
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