CROMPTON

’s Strategic Pivot Positions It for Re-Rating

has corrected sharply from its 52-week high of ₹368, weighed down by subdued earnings and cautious sentiment. At first glance, Crompton appears to be a steady, mature electricals player. But beneath the surface, a strategic pivot towards premiumisation, solar, and adjacencies like residential wires is underway, broadening its growth runway and positioning the company for a gradual re-rating. Operational Highlights (Q3FY26) - Core ECD (73% of revenue): +7.5% YoY growth. - Fans: Sequential improvement, strong BLDC traction; seamless transition to BEE 2.0 norms. - BLDC portfolio: >5% market share gain, reinforcing premium positioning. - Pumps: Double-digit growth; solar pumps >2x growth; share gains across residential, agri, and solar. - Appliances: - Small appliances: Kitchen categories (induction cooktops, air fryers) gaining traction. - Butterfly portfolio: Cookers and gas stoves led growth; premium Idea First Series boosted retail momentum. EBIT margin +80 bps YoY. - Lighting: Double-digit volume growth in B2C (ceiling lights, accessories, new launches) and B2B (commercial, street, industrial projects). Margins protected despite higher raw material costs. - Solar: Solar pumps revenue >2x YoY; rooftop solar revenue ₹19 crore in debut quarter, order book ₹365 crore. Strategic Expansion - Residential wires entry: ₹36,000 crore market, expanding addressable base to ₹1.6–1.7 lakh crore. - Outsourced manufacturing model ensures capital discipline. - Phased rollout leveraging brand strength and distribution network. Outlook & Valuation - Earnings expected to accelerate from FY27, supported by solar scale-up, wires expansion, and premium mix. - ROIC to improve, with transition towards a net cash balance sheet. - Valuation: ~23x FY28 earnings, below historical averages, offering favourable risk-reward. - Crompton’s purposeful transition positions it for gradual re-rating over the next 12–24 months.