18 may 2020 results review 4qfy20 crompton consumer consumer... · 2020. 5. 18. · 18 may 2020...

18 May 2020 Results Review 4QFY20

Crompton Consumer

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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

[email protected]

+91-22-6171-7324

Aditya Sane

[email protected]

+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


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


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


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


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


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)


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


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


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


Lighting Performance Electric Consumer Performance


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


Revenue Mix (FY20) EBIT Mix (FY20)



Industry Fan Mix Crompton Fan Mix


Premium: >Rs 2,200 Price

Mass-Premium: Rs 1,500-Rs 2,200

Mass: <Rs 1,500


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


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


Page | 9


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


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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


Page | 11


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

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Crompton Consumer TP

Page | 12


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18 may 2020 results review 4qfy20 crompton consumer consumer... · 2020. 5. 18. · 18 may 2020...

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