18 may 2020 results review 4qfy20 crompton consumer consumer... · 2020. 5. 18. · 18 may 2020...
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18 May 2020 Results Review 4QFY20
Crompton Consumer
HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters
Resilient show as Covid halts recovery
Crompton’s performance in 4QFY20 saw a strong start as the co registered 14%
yoy growth in its net revenues in Jan/Feb 2020. ECD clocked 18% in Jan/Feb
while Lighting was at 4%. Fans, Appliances and domestic pumps registered
volume growth of 21%, 48% and 19%. Covid led lockdown impacted the
quarter adversely as co missed out on sales during the last 10-15 days of
March (~25% of revenue mix for the quarter). However, compared to its peers,
Crompton’s performance was resilient. Decline of 14% yoy in ECD was in-line
with Havells while the decline of 19% yoy in Lighting was better than the 31%
yoy decline reported by Havells. We believe Crompton’s business is more
essential than discretionary as Fan/Lighting/Pumps are need based. Thereby,
revenue loss due to lockdown will be limited than its peers. Owing to
continued extension of lockdown and weakness in demand, we cut our EPS
estimates 6/3% for FY21/FY22 (22/21% cut in our 4QFY20 Preview). We value
Crompton at 30x on Mar-22E EPS, deriving a TP of Rs 221. Maintain ADD.
Strong growth pre-Covid: Net revenue saw contraction of 16% yoy (exp of
6% dip) to Rs 10.1bn (+7% in 4QFY19 and +4% in 3QFY20). ECD/Lighting
revenues saw decline of 14/19% yoy. However, Jan/Feb saw healthy 14% yoy
growth led by 18% growth in ECD. Fan continues to gain market share (1%
up yoy). Lighting too saw return to growth and clocked 4% growth in
Jan/Feb. Overall volume growth was 33% yoy in Jan/Feb. Co is focusing on
product innovation to drive growth and market share.
Margins resilient: GM expanded by 67bps yoy to 31.6% (-64bps 4QFY19,
+21bps 3QFY19). Employee/other expenses decreased by 8/12%. EBITDAM
was down by 37bps yoy to 13.6% (exp 12.8%). EBITDA saw a decline of 18%
yoy (exp dip of 15%). ECD EBIT margins expanded by 51bps yoy to 20%.
Lighting margin remained under pressure, and declined by 450bps to 7%.
Co plans to cut down cost by Rs 1bn in FY21 to support margins.
Call & other takeaways: (1) Co’s plants are now operational and functioning
at 25-30% of capacity, (2) Overall 40-50% of retail touchpoints have
reopened. Demand in these stores is at 60-70% of normal, (3) Trade
inventory is normal, (4) Co has 1 month inventory despite production loss,
no supply side constraints, (5) Fans and Pumps have seen revival in demand
in May, (6) Production improvement will continue, (7) Co’s liquidity
remains strong with Rs 5.85bn of cash. Additionally, co also has board
approval for raising Rs 3bn via NCDs.
Maintain ADD: Consistent outperformance in ECD, price increase in B-C
lighting and stock correction of 30% in the last 3 months keeps us
interested in the story. We maintain ADD rating.
Financial Summary
YE Mar (Rs mn) Q4
FY20
Q4
FY19
YoY
(%)
Q3
FY20
QoQ
(%) FY19 FY20P FY21E FY22E
Net Sales 10,181 12,069 (15.6) 10,713 (5.0) 44,789 45,120 42,198 48,462
EBITDA 1,384 1,685 (17.9) 1,369 1.1 5,858 5,965 5,347 6,205
APAT 998 1,118 (10.7) 1,043 (4.3) 3,727 4,376 4,012 4,741
Diluted EPS (Rs) 1.59 1.78 (10.8) 1.66 (4.3) 5.9 7.0 6.2 7.4
P/E (x)
33.5 28.5 31.9 27.0
EV / EBITDA (x)
21.3 20.5 23.0 19.1
RoCE (%)
38.2 38.6 31.0 35.8
Source: Company, HSIE Research
ADD
CMP (as on 18 May 2020) Rs 199
Target Price Rs 221
NIFTY 8,823
KEY
CHANGES OLD NEW
Rating ADD ADD
Price Target Rs 227 Rs 221
EPS % FY21E FY22E
-6% -3%
KEY STOCK DATA
Bloomberg code CROMPTON IN
No. of Shares (mn) 627
MCap (Rs bn) / ($ mn) 125/1,647
6m avg traded value (Rs mn) 367
52 Week high / low Rs 301/177
STOCK PERFORMANCE (%)
3M 6M 12M
Absolute (%) (30.2) (24.6) (6.8)
Relative (%) (3.7) 0.9 14.1
SHAREHOLDING PATTERN (%)
Dec-19 Mar-20
Promoters 26.20 26.20
FIs & Local MFs 26.85 26.68
FPIs 30.88 30.51
Public & Others 16.07 16.61
Pledged Shares 0.0 0.0
Source : BSE
Naveen Trivedi
naveen.trivedi@hdfcsec.com
+91-22-6171-7324
Aditya Sane
aditya.sane@hdfcsec.com
+91-22-6171-7336
Page | 2
Crompton Consumers: Results Review 4QFY20
Crompton Consumer Quarterly Commentary Particulars 1QFY20 2QFY20 3QFY20 4QFY20
Industry/ Co
Strategy
- Retail uptake market decline
has now levelled off and data
indicates that it is growing at a
rate in the mid-single digits
- Co is focusing on restoring
value in the market by bringing
in premium initiatives like the
'Antibacterial Bulb'
- In EESL, there have been
industry wide price cuts which
were supported by cost
reduction projects by most
players
- The co has been focusing on
appliances and the next key
segment will be small
appliances, especially mixer
grinders
- Overall macros remain
challenging
- Co sees this as an opportunity
to step up its investment on
brand building and gaining
market share
- There has been no significant
trend of downstocking in trade
channels
- All plants of co are now
operational and operating at 25-
30% of capacity
- 40-50% of retail touchpoints
are now open with demand at
60-70% of normal
- Inventory across the channel
and with co is at normal levels
- Swing towards ecomm is not
expected to be dramatic
Revenue
ECD - ECD posted strong
performance in continuation
with last few quarters
- The momentum in the geyser
business continued, showing
robust growth
- Introduced a 'Desert Cooler'
which grew well
- Market share gain in Fans
continued. The focus remains
on premium fans
- ECD continued its strong
momentum
- All businesses in the segment
performed well led by robust
growth in fans, agricultural
pumps and geysers
- This performance comes
despite challenges posed by
heavy rains and floods in
Eastern India
- Fan grew by 9% and gained
80bps mkt share to 27%. Co is
no 2 player in premium fans
(MOP >Rs 2500) with 20-25%
mkt share
- Domestic pump grew double
digit while agro pump was
weak
- Water heater grew by 64%
(11% mkt share vs. 7%), Air
Cooler grew 2x (3% mkt share),
Mixer grew by 40% (low single
digit share)
- Growth in Jan/Feb was strong
led by growth in Fans as well as
Appliances
- Fans saw volume growth of
20% pre-Covid and co gained
market share of 100bps
- Co launched Optimus series in
air coolers
- Consumer offtake in air
coolers and pumps is
dependent on 1Q. However,
Fans not as dependent
Lighting
Products
- Volume growth in LED
business was stronger than the
value growth
- In the B2C vertical, focus
remains on product innovation
and premium pricing in order
to combat price erosion in the
industry
- B2B vertical was soft in
1QFY20, mainly due to the
delay in government and
institutional orders because of
the elections, but pace of order
inflows has started to recover in
2QFY20. Co is heavily
dependent on govt spending
for order flows in B2B
- EESL drove a significant
amount of the decline
- Ex-EESL, B2B is a key growth
area and co has made
significant investments behind
the same
- B2C business continues to be
challenging due to price
erosion, but volume growth
remains healthy
- LED volumes grew by 13-14%,
the co gained 100bps mkt share.
- LEDs have not seen price
erosion for the last 2-3 months,
but prices are still lower YoY
- Bulbs are extremely cost
efficient, and hence further
price erosion is not expected
- Co made investments for
automation of bulb mfg in
Baroda. Installed 7 lines out of
which 3 are fully operational.
New lines are expected to drive
cost optimization
- A new type of backup bulb
was launched with 1hr and 4hr
variants
- Supply chain from China is
not expected to be impacted by
corona virus epidemic in the
near to mid term
- Ex-EESL, Lighting registered a
growth of 7.5% yoy in Jan/Feb
with total growth at 4% yoy. B-
C volume remained strong in
that period and was up 37%.
- Sequential EBIT margin
improved despite March
disruption.
- Co launched new range of
energy efficient LED tubes in
4QFY20.
- B-C price erosion is expected
to be in the past. However, B-B
could see some price erosion
over the next few months.
- B-G contributes to 50% of B-B
revenue. Recovery in B-G is
expected to be slower than B-C.
Margin
Gross Margin - Gross margin in Lighting saw
an increase
- GM expansion was largely a
result of price increase, which
was seen mainly in fans
- Gross margin in Lighting saw
an increase
- 5-7% Price increase in B2C
lighting didn’t go to market due
to lockdown
EBITDA
Margin
- Despite GM increase,
EBITDAM in Lighting declined
due to higher investment in
advertising behind World Cup
and 'B2B structural changes
- Difference between EBITDA
and GM is driven by
investments in capability (New
CTO, new structure for B2B,
etc)
- ECD margin will remain
healthy led by premiumisation,
cost control
- Lighting EBIT margin can
improve gradually with several
initiatives and premiumisation
- ASP spend Rs 210mn in 3Q
and Rs 890mn in 9M (up 14%)
- Co is focusing on cost
rationalization. It has identified
cost saving measures worth Rs
1bn
Page | 3
Crompton Consumers: Results Review 4QFY20
New Launches in 2018-19
Source: Company
Anti-bacteria bulb was
launched at a premium of
15-20%
Launched 5 star rated LED
called Lyor. The product is
20% more efficient than 3
star LED bulbs and 50%
efficient than conventional
bulbs
Depletion of ground water
is driving market growth
for pumps
Crompton has launched a
range of wide voltage
pumps. These pumps will
provide the desired
water output, despite
fluctuating voltage
In fans, co’s strategy is to
fix product gaps via new
launches with improved
technology, IoT enabled
fans and AI-based
products
Aura 2.0 range has a 5 year
warranty (first fan to offer
5 years) owing to its
Duratech technology
In appliances, co is
working on improving
their product mix by
launching premium
products
In FY19, co has re-launched
water heaters, expanded
portfolio in air coolers and
launched more SKUs in
small appliances (like
irons)
Page | 4
Crompton Consumers: Results Review 4QFY20
Quarterly Financial Snapshot
Particulars (Rs mn) Q4FY20 Q4FY19 YoY (%) Q3FY20 QoQ(%) FY20 FY19 YoY(%)
Net Revenue 10,181 12,069 (15.6) 10,713 (5.0) 45,120 44,789 0.7
Material Expenses 6,961 8,332 (16.5) 7,290 (4.5) 30,650 30,918 (0.9)
Employee Expenses 706 765 (7.7) 774 (8.7) 3,110 2,919 6.5
Other Operating Expenses 1,129 1,286 (12.2) 1,281 (11.8) 5,395 5,094 5.9
EBITDA 1,384 1,685 (17.9) 1,369 1.1 5,965 5,858 1.8
Depreciation 82 33 148.5 64 27.7 268 129 107.8
EBIT 1,302 1,652 (21.2) 1,304 (0.2) 5,697 5,729 (0.6)
Other Income 119 172 (30.7) 174 (31.5) 589 483 21.9
Interest Cost 83 143 (42.4) 87 (5.4) 407 596 (31.8)
PBT 1,339 1,681 (20.4) 1,391 (3.7) 5,879 5,616 4.7
Exceptional item - - na - na - - na
PBT after exceptional 1,339 1,681 (20.4) 1,391 (3.7) 5,879 5,616 4.7
Tax 341 265 28.8 (219) (255.6) 936 1,590 (41.2)
RPAT 998 1,417 (29.5) 1,610 (38.0) 4,943 4,025 22.8
EO Items (Adj For Tax) - 299 na 567 na (567) (299) na
APAT 998 1,118 (10.7) 1,043 (4.3) 4,376 3,727 17.4
EPS 1.59 1.78 (10.8) 1.66 (4.3) 6.98 5.95 17.4
Source: Company, HSIE Research
Quarterly Performance Analysis
As a % of net sales Q4FY20 Q4FY19 YoY(bps) Q3FY20 QoQ(bps) FY20 FY19 YoY(bps)
Material Expenses 68.4 69.0 (67) 68.0 33 67.9 69.0 (110)
Employee Expenses 6.9 6.3 60 7.2 (29) 6.9 6.5 38
Other Operating Expenses 11.1 10.7 44 12.0 (87) 12.0 11.4 58
EBITDA Margin 13.6 14.0 (37) 12.8 82 13.2 13.1 14
Tax Rate 25.5 15.7 972 (15.8) 4,121 15.9 28.3 (1,240)
APAT Margin 9.8 9.3 54 9.7 7 9.7 8.3 138
Source: Company, HSIE Research
Net revenue saw
contraction of 16% yoy
(exp of -6%)
Employee/other expenses
decreased by 8/12%.
GM expanded by 67bps
yoy to 31.6% (-64bps
4QFY19, +21bps 3QFY19)
vs expectation of +100bps.
EBITDAM dipped by 37bps
yoy to 13.6% vs exp 12.8%.
EBITDA saw a decline of
18% yoy (exp dip of 15%).
Page | 5
Crompton Consumers: Results Review 4QFY20
Segmental Performance
(Rs mn) Q4FY20 Q4FY19 YoY (%) Q3FY20 QoQ(%) FY20 FY19 YoY(%)
Segmental Revenues 2,770 3,425 (19.1) 2,843 (2.6) 11,229 12,653 (11.3)
Lighting Products 7,411 8,644 (14.3) 7,870 (5.8) 33,890 32,136 5.5
ECD 10,181 12,069 (15.6) 10,713 (5.0) 45,120 44,789 0.7
Total
Segmental EBIT 193 393 (50.9) 196 (1.4) 680 1,069 (36.4)
Lighting Products 1,482 1,685 (12.0) 1,561 (5.1) 6,731 6,162 9.2
ECD 1,675 2,077 (19.4) 1,757 (4.7) 7,411 7,230 2.5
Total
Less: 83 143 (42.4) 87 (5.4) - 596 (100.0)
(a) Interest Cost & Bank
Charges 253 253 0.2 279 (9.1) 1,039 1,019 2.0
(b) Other Un-allocable
Expenses 1,339 1,681 (20.4) 1,391 (3.7) 6,372 5,616 13.5
PBT
Capital Employed 942 440 114.1 1,042 (9.6) 942 440 114.1
Lighting Products 2,427 2,214 9.6 1,910 27.1 2,427 2,214 9.6
ECD 3,369 2,654 26.9 2,951 14.1 3,369 2,654 26.9
Total 11,309 8,330 35.8 10,691 5.8 11,309 8,330 35.8
Unallocable Capital
Employed 14,678 10,983 33.6 13,642 7.6 14,678 10,983 33.6
Total Capital Employed 2,770 3,425 (19.1) 2,843 (2.6) 11,229 12,653 (11.3)
Source: Company, HSIE Research
EBIT Margin
EBIT Margin Q4FY20 Q4FY19 YoY(bps) Q3FY20 QoQ(bps) FY20 FY19 YoY(bps)
Lighting Products 7.0 11.5 (450.4) 6.9 8.2 6.1 8.4 (239.0)
ECD 20.0 19.5 50.8 19.8 15.6 19.9 19.2 68.8
Total 16.5 17.2 (76.1) 16.4 5.0 16.4 16.1 28.2
Source: Company, HSIE Research
Segmental Analysis (like-to-like growth)
Particulars (YoY %) 4QFY18 1QFY19 2QFY19 3QFY19 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 FY18 FY19 FY20
Revenue Growth (%)
Lighting Products 21% 10% -4% -2% 1% -2% -11% -11% -19% 20% 4% -11%
ECD 10% 23% 15% 16% 10% 16% 11% 11% -14% 5% 16% 5%
Total 13% 20% 8% 10% 7% 12% 4% 4% -16% 8% 11% 1%
Revenue Mix (%)
Lighting Products 30% 23% 31% 31% 28% 20% 27% 27% 27% 31% 28% 25%
ECD 70% 77% 69% 69% 72% 80% 73% 73% 73% 69% 72% 75%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
EBIT Growth (%)
Lighting Products 96% -15% -52% -38% 5% -25% -27% -31% -51% 47% -27% -36%
ECD 16% 27% 21% 19% -2% 21% 12% 18% -12% 9% 15% 9%
Total 25% 22% 1% 3% 0% 16% 7% 9% -19% 15% 6% 3%
EBIT Mix (%)
Lighting Products 18% 9% 13% 18% 19% 6% 9% 11% 12% 22% 15% 9%
ECD 82% 91% 87% 82% 81% 94% 91% 89% 88% 78% 85% 91%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%
Page | 6
Crompton Consumers: Results Review 4QFY20
Long term performance trends
Net Revenue Gross Margin vs EBITDA Margin
Source: Company, HSIE Research Source: Company, HSIE Research
Lighting Revenues & EBIT Margin ECD Revenues & EBIT Margin
Source: Company, HSIE Research Source: Company, HSIE Research
Lighting Performance Electric Consumer Performance
Source: Company, HSIE Research Source: Company, HSIE Research
8%
10%
12%
14%
16%
28%
30%
32%
34%
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Gross Margin EBITDA Margin - RHS
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
4QF
Y17
1QF
Y18
2QF
Y18
3QF
Y18
4QF
Y18
1QF
Y19
2QF
Y19
3QF
Y19
4QF
Y19
1QF
Y20
2QF
Y20
3QF
Y20
4QF
Y20
Net Sales YoY Gr.(%)- RHS(Rs mn)
0.0%
4.0%
8.0%
12.0%
16.0%
-
1,000
2,000
3,000
4,000
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Revenues EBIT Margin (Rs mn)
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
-
2,000
4,000
6,000
8,000
10,000
12,000
4Q
FY
17
1Q
FY
18
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Revenues EBIT Margin - RHS(Rs mn)
11
%
7% 1
0%
23
%
15
%
16
%
10
%
16
%
11
%
11
%
-14
%
27
%
14
%
16
%
27
%
21
%
19
%
-2%
21
%
12
% 18
%
-12
%-20%
-7%
6%
19%
32%
45%
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Revenue Gr. (%) EBIT Gr. (%)
25
%
23
%
21
%
2%
-4%
-2%
1%
-2%
-11
%
-11
%
-19
%
25
% 42
%
96
%-1
5%
-52
%
-38
%
5%
-25
%
-27
%
-31
%
-51
%
-75%
-50%
-25%
0%
25%
50%
75%
100%
2Q
FY
18
3Q
FY
18
4Q
FY
18
1Q
FY
19
2Q
FY
19
3Q
FY
19
4Q
FY
19
1Q
FY
20
2Q
FY
20
3Q
FY
20
4Q
FY
20
Revenue Gr. (%) EBIT Gr. (%)
Page | 7
Crompton Consumers: Results Review 4QFY20
Revenue Mix (FY20) EBIT Mix (FY20)
Source: Company, HSIE Research
Source: Company, HSIE Research
Industry Fan Mix Crompton Fan Mix
Source: Company, HSIE Research
Premium: >Rs 2,200 Price
Mass-Premium: Rs 1,500-Rs 2,200
Mass: <Rs 1,500
Source: Company, HSIE Research
Lighting
Products,
25%
ECD, 75%
Lighting
Products, 9%
ECD, 91%
Mass, 40%
Mass
Premium, 50%
Premium,
10%
Mass, 20%
Mass
Premium,
60%
Premium,
20%
Page | 8
Crompton Consumers: Results Review 4QFY20
Key Assumptions
Segments Revenue (Rs mn) Revenue Growth (%) Revenue Mix (%) EBIT Margin (%)
FY19 FY20E FY21E FY22E FY19 FY20E FY21E FY22E FY19 FY20E FY21E FY22E FY19 FY20E FY21E FY22E
ECD 32,136 33,890 32,204 36,969 15.9% 5.5% -5.0% 14.8% 71.7% 75.1% 76.3% 76.3% 19.2% 19.9% 19.3% 19.6%
Fans 20,096 21,114 19,847 22,824 12.1% 5.1% -6.0% 15.0% 44.9% 46.8% 47.0% 47.1%
Pump 9,340 9,807 9,120 10,260 17.5% 5.0% -7.0% 12.5% 20.9% 21.7% 21.6% 21.2%
Appliances 2,700 2,970 3,237 3,885 25.0% 10.0% 9.0% 20.0% 6.0% 6.6% 7.7% 8.0%
Lighting 12,653 11,229 9,994 11,493 -0.8% -11.3% -11.0% 15.0% 28.3% 24.9% 23.7% 23.7% 8.4% 6.1% 6.0% 7.0%
Total 44,789 45,120 42,198 48,462 11.3% 0.7% -6.5% 14.8% 100.0% 100.0% 100.0% 100.0%
Change in Estimates
FY21E FY22E
OLD NEW Chg (%) OLD NEW Chg (%)
Net Sales 44,927 42,198 (6.1) 49,590 48,462 (2.3)
EBITDA 5,623 5,347 (4.9) 6,176 6,205 0.5
APAT 4,255 4,012 (5.7) 4,879 4,741 (2.8)
EPS 6.6 6.2 (5.7) 7.6 7.4 (2.8)
Peer Set Comparison
Company Mcap
(Rs bn)
CMP
(Rs/sh) Reco TP
EPS (Rs) P/E (x) EV/EBITDA (x) Core RoCE (%)
FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E
Havells 297 475 ADD 515 11.7 10.7 14.2 40.6 44.6 33.5 27.9 28.3 21.9 21.0 18.3 24.0
Voltas 146 442 ADD 551 16.9 15.1 19.4 26.2 29.3 22.7 23.1 25.6 19.8 19.9 15.9 20.0
Crompton 125 199 ADD 221 7.0 6.2 7.4 28.5 31.9 27.0 20.5 23.0 19.1 38.6 31.0 35.8
V-Guard 74 173 REDUCE 157 4.7 4.8 5.6 36.4 35.9 30.9 25.4 26.1 22.7 24.9 23.1 25.4
Symphony 54 770 REDUCE 900 25.4 23.3 30.0 30.4 33.0 25.7 23.5 27.0 20.7 43.4 31.9 41.3
Source: Company, HSIE Research
Page | 9
Crompton Consumers: Results Review 4QFY20
Financials Income Statement Year End (March) FY16 FY17 FY18 FY19 FY20P FY21E FY22E
Net Revenues 18,117 39,009 40,797 44,789 45,120 42,198 48,462
Growth (%)
9.7 8.0 11.3 0.7 (6.5) 14.8
Material Expenses 12,889 27,838 28,600 31,557 31,294 29,140 33,187
Employee Expense 1,005 2,322 2,827 2,919 3,110 3,517 3,981
ASP Expense 348 1,007 1,056 912 1,376 1,342 1,623
Distribution Expense 462 894 999 1,294 1,303 1,219 1,187
Other expenses 1,319 2,101 2,005 2,250 2,072 1,633 2,278
EBITDA 2,095 4,846 5,310 5,858 5,965 5,347 6,205
EBITDA Growth (%)
15.7 9.6 10.3 1.8 (10.4) 16.0
EBITDA Margin (%) 11.6 12.4 13.0 13.1 13.2 12.7 12.8
Depreciation 63 110 126 129 268 276 315
EBIT 2,032 4,736 5,184 5,729 5,697 5,072 5,890
Other Income (Including EO Items) 178 220 308 483 589 588 605
Interest 355 655 637 596 407 298 159
PBT 1,577 4,250 4,854 5,616 5,879 5,361 6,336
Tax 525 1,419 1,617 1,590 936 1,349 1,595
RPAT 1,052 2,832 3,238 4,025 4,943 4,012 4,741
Adjustment 93 17 (0) (298) (567) - -
Adjusted PAT 1,145 2,849 3,238 3,727 4,376 4,012 4,741
APAT Growth (%)
24.4 13.7 15.1 17.4 (8.3) 18.2
EPS 1.8 4.5 5.2 5.9 7.0 6.2 7.4
EPS Growth (%)*
24.4 13.7 15.1 17.4 (10.5) 18.2
*Adjusted for partial FY16, Source: Company, HSIE Research
Balance Sheet Particulars (Rs mn) FY16 FY17 FY18 FY19 FY20P FY21E FY22E
SOURCES OF FUNDS
Share Capital - Equity 1,254 1,254 1,254 1,254 1,255 1,284 1,284
Reserves 810 3,924 6,642 9,730 13,423 15,932 20,032
Total Shareholders Funds 2,064 5,178 7,895 10,984 14,678 17,217 21,316
Long Term Debt 5,072 6,478 6,486 6,493 3,590 1,890 190
Short Term Debt 100 - - - - - -
Total Debt 5,172 6,478 6,486 6,493 3,590 1,890 190
Net Deferred Taxes (161) (295) (479) (597) (506) (506) (506)
Other Non-Current Liabilities 146 176 175 173 191 208 236
TOTAL SOURCES OF FUNDS 7,220 11,537 14,077 17,053 17,953 18,809 21,236
APPLICATION OF FUNDS
Tangible Assets 786 821 822 837 1,296 1,501 1,487
CWIP 1 1 6 10 199 - -
Goodwill 7,794 7,794 7,794 7,794 7,794 7,794 7,794
Other Non-Current Assets 178 186 274 393 448 472 511
Total Non-current Assets 8,759 8,801 8,896 9,035 9,737 9,768 9,792
Inventories 2,451 2,734 3,032 3,524 4,636 4,220 4,604
Debtors 3,569 4,728 5,536 5,660 4,587 4,290 4,927
Other Current Assets 743 687 855 976 2,107 2,196 2,449
Cash & Equivalents 900 3,888 5,452 6,724 5,866 6,874 9,205
Total Current Assets 7,664 12,037 14,876 16,883 17,197 17,580 21,185
Creditors 6,674 7,128 7,682 6,642 6,372 5,960 6,844
Other Current Liabilities 2,529 2,174 2,012 2,224 2,608 2,579 2,897
Total Current Liabilities 9,203 9,302 9,695 8,866 8,981 8,539 9,741
Net Current Assets (1,539) 2,736 5,181 8,018 8,216 9,041 11,444
TOTAL APPLICATION OF FUNDS 7,220 11,537 14,077 17,053 17,953 18,809 21,236
Source: Company, HSIE Research
Page | 10
Crompton Consumers: Results Review 4QFY20
Cash Flow Particulars (Rs mn) FY16 FY17 FY18 FY19 FY20E FY21E FY22E
Reported PBT 1,577 4,276 4,854 5,616 5,879 5,361 6,336
Interest Expenses 351 655 637 596 407 298 159
Depreciation 63 110 126 129 268 276 315
Working Capital Change 357 (548) (933) (1,202) (602) 183 (72)
Tax Paid (540) (1,466) (1,812) (1,994) (1,445) (1,349) (1,595)
OPERATING CASH FLOW ( a ) 1,757 3,126 3,154 3,014 4,207 4,768 5,144
Capex (15) (150) (135) (160) (494) (285) (300)
Free Cash Flow (FCF) 1,742 2,976 3,020 2,855 3,713 4,483 4,844
Investments - (3,233) (482) (1,675) 238 (904) (500)
Non-operating Income 40 190 286 262 240 (24) (38)
INVESTING CASH FLOW ( b ) 24 (3,193) (331) (1,714) (17) (1,213) (838)
Debt Issuance/(Repaid) (533) 56 - - (3,088) (1,700) (1,700)
Interest Expenses (351) (230) (634) (587) (586) (298) (159)
FCFE 898 (242) 2,190 713 517 1,557 2,446
Share Capital Issuance - - 7 38 52 (831) 321
Dividend - - (1,129) (1,312) (1,506) (642) (963)
Others
- - - - 17 28
FINANCING CASH FLOW ( c ) (883) (175) (1,755) (1,862) (5,128) (3,454) (2,474)
NET CASH FLOW (a+b+c) 898 (242) 1,069 (562) (938) 101 1,831
EO Items, Others - 41 8 212 (16) 3 -
Closing Cash & Equivalents 898 697 1,774 1,424 471 574 2,406
Key Ratios FY16 FY17 FY18 FY19 FY20P FY21E FY22E
PROFITABILITY (%)
GPM 28.9 28.6 29.9 29.5 30.6 30.9 31.5
EBITDA Margin (%) 11.6 12.4 13.0 13.1 13.2 12.7 12.8
EBIT Margin 11.2 12.1 12.7 12.8 12.6 12.0 12.2
APAT Margin 6.3 7.3 7.9 8.3 9.7 9.5 9.8
RoE 110.9 55.0 41.0 33.9 29.8 23.3 22.2
RoIC (or Core RoCE) 42.8 40.6 38.7 38.2 38.6 31.0 35.8
RoCE 38.2 28.2 25.5 23.8 25.8 22.2 22.6
EFFICIENCY
Tax Rate (%) 33.3 33.4 33.3 28.3 15.9 25.2 25.2
Fixed Asset Turnover (x) 3.7 4.5 4.6 5.0 4.6 4.1 4.6
Inventory (days) 24.7 25.6 27.1 28.7 37.5 36.5 34.7
Debtors (days) 36.0 44.2 49.5 46.1 37.1 37.1 37.1
Other Current Assets (days) 7.5 6.4 7.6 8.0 17.0 19.0 18.4
Payables (days) 67.2 66.7 68.7 54.1 51.5 51.5 51.5
Other Current Liab & Provns (days) 25.5 20.3 18.0 18.1 21.1 22.3 21.8
Cash Conversion Cycle (days) (24.6) (10.8) (2.4) 10.5 19.0 18.7 16.9
Net D/E (x) 2.1 0.5 0.1 (0.0) (0.2) (0.3) (0.4)
Interest Coverage (x) 5.7 7.2 8.1 9.6 14.0 17.0 37.0
PER SHARE DATA (Rs)
EPS 1.8 4.5 5.2 5.9 7.0 6.2 7.4
CEPS 1.9 4.7 5.4 6.1 7.4 6.7 7.9
Dividend - 1.5 1.8 2.0 - 1.0 1.5
Book Value 3.3 8.3 12.6 17.5 23.4 26.8 33.2
VALUATION
P/E (x) 54.5 43.8 38.5 33.5 28.5 31.9 27.0
P/BV (x) 30.2 24.1 15.8 11.4 8.5 7.4 6.0
EV/EBITDA (x) 30.8 26.3 23.7 21.3 20.5 23.0 19.1
EV/Revenues (x) 3.6 3.3 3.1 2.8 2.7 2.9 2.5
OCF/EV (%) 1.4 2.5 2.5 2.4 3.4 3.9 4.3
FCF/EV (%) 1.4 2.3 2.4 2.3 3.0 3.7 4.1
FCFE/Mkt Cap (%) 0.7 (0.2) 1.8 0.6 0.4 1.2 1.9
Dividend Yield (%) - 0.8 0.9 1.0 - 0.5 0.8
Source: Company, HSIE Research
Page | 11
Crompton Consumers: Results Review 4QFY20
Rating Criteria
BUY: >+15% return potential
ADD: +5% to +15% return potential
REDUCE: -10% to +5% return potential
SELL: >10% Downside return potential
Date CMP Reco Target
23-May-19 219 BUY 300
4-Jun-19 243 BUY 300
9-Jul-19 228 BUY 300
25-Jul-19 225 BUY 304
22-Sep-19 251 BUY 336
11-Oct-19 257 BUY 349
24-Oct-19 255 BUY 339
9-Jan-20 239 BUY 339
31-Jan-20 267 BUY 333
2-Mar-20 278 BUY 338
17-Apr-20 214 ADD 227
18-May-20 199 ADD 221
From 2nd March 2020, we have moved to new rating system
RECOMMENDATION HISTORY
150
170
190
210
230
250
270
290
310
330
350
Ma
y-1
9
Jun
-19
Jul-
19
Au
g-1
9
Sep
-19
Oct
-19
No
v-1
9
Dec
-19
Jan
-20
Feb
-20
Ma
r-2
0
Ap
r-2
0
Ma
y-2
0
Crompton Consumer TP
Page | 12
Crompton Consumers: Results Review 4QFY20
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