At a Glance
Crompton is a 75-year-old household brand trying hard to behave like a 25-year-old D2C startup. From ads to appliances, it’s been spending crores in a bid to “premiumize” everything. But behind the buzzwords of “Crompton 2.0” — the numbers are, well, not exactly electrifying.
🏠 What Does Crompton Even Do?
It sells everything your nani wanted in her drawing room ceiling:
- 🌀 Fans (still ~40% of revenue)
- 💡 Lighting products
- 🧴 Water heaters, geysers, coolers, mixer grinders, small appliances
- 🧼 Pumps (yes, that’s still a thing)
- 🍽️ Butterfly Gandhimathi (acquired for kitchen appliances)
Basically, the company wants to be the Indian Philips, but without Philips margins (yet).
⚙️ The Great Reinvention: “Crompton 2.0”
Since FY24, management has been chanting a 4-part mantra:
- Premiumization (a.k.a. increase ASPs, not just volume)
- GTM Excellence (a.k.a. better distribution)
- Brand Investments – ₹92 Cr spent in ads in just 6 months
- Innovation – New product launches in water heaters and fans
They’re calling it a transformation. The market’s calling it… meh (for now).
📉 5-Year Financial Recap (FY20–25)
| Metric | FY20 | FY25 | CAGR |
|---|---|---|---|
| Revenue (₹ Cr) | 4,520 | 7,864 | 11.7% |
| Net Profit (₹ Cr) | 496 | 564 | 2.6% |
| OPM (%) | 13% | 11% | Declining |
| EPS (₹) | 7.91 | 8.64 | 🐢 Slow |
| ROCE (%) | 35% | 19% | 😬 Halfed |
| Dividend Payout (%) | 0% → 35% | Now shareholder-friendly |
💬 Translation: Sales are crawling up. Profits are limping. Margins? Declining.
And yet… this stock trades at P/E of ~40x. Why? 🤷
🧪 Latest Quarter (Q4 FY25) Breakdown
- Revenue: ₹2,061 Cr
- Net Profit: ₹172 Cr
- OPM: 13% (a rare rebound)
- EPS: ₹2.63
To Crompton’s credit, profit is finally recovering — maybe those ads worked?
But the base effect helped too — FY24 was rough.
📦 Segment Watch: Fans, Appliances, & Kitchen Drama
- Fans – Saturated market, fierce price wars
- Appliances – Decent growth, but very competitive (Usha, Bajaj, Orient, Havells)
- Lighting – Margin killer
- Kitchen (Butterfly) – A ₹2,000 Cr acquisition that hasn’t yet “cooked” returns
Butterfly was supposed to fly. Instead, it’s been crawling through margin pressure and integration blues.
🧮 Fair Value (FV) Range: ₹270–₹305
Let’s sanity-check this:
- EPS TTM: ₹8.64
- Assign realistic P/E of 31x–35x (given low growth, high competition)
- FV = ₹8.64 × 31 = ₹268
- Upper FV = ₹8.64 × 35 = ₹302
🟢 CMP = ₹345
Which means Crompton is trading ~15% above FV range, despite not having profit growth for 5 years.
🧠 What’s Working?
✅ Debt reduced: ₹1,686 Cr → ₹479 Cr over 3 years
✅ Improving cash flows: ₹737 Cr from operations in FY25
✅ Higher dividend payouts to keep long-term investors from yawning
✅ Strong DII ownership: 57% (Mutual Funds clearly still hopeful)
🧠 What’s Not?
❌ ROCE fell from 35% to 19% in 5 years
❌ Margin compression: OPM down from 15% to 11%
❌ Still absorbing Butterfly acquisition
❌ Promoter holding = 0%
❌ Stock CAGR (3Y) = 1%
❌ Sales CAGR (5Y) = 11.7%, i.e. below inflation+electricity bill
🧑🏫 Edu Take
“Crompton is that 75-year-old uncle who suddenly wears sneakers, uses Instagram filters, and says ‘vibe check’.”
Crompton 2.0 has the right intention, but execution needs time. Right now, it’s priced like a growth stock, delivering like a PSU.
The only upside? If premiumization works AND kitchen appliances take off, FY26 could surprise.
But until then… you’re paying ₹345 for a ₹300 story. Choose wisely.
Tags: Crompton 2.0, Electrical Appliances, Butterfly Gandhimathi, Indian Consumer Stocks, Nifty 500, Household Brands, EduInvesting
✍️ Written by Prashant | 📅 June 22, 2025
