Why Crompton Greaves Share Price is Falling

The Indian electronics sector has seen significant growth in recent years.

This is due to rising consumer demand, rapid technological advancements, and government initiatives like Make in India.

More households are adopting modern appliances and smart technologies. This has boosted sales of consumer electronics.

However, the sector also faces challenges like fluctuating raw material prices, supply chain issues, and stiff competition.

Crompton Greaves Consumer Electronics, or Crompton Greaves, is one of the oldest and most well-known brands in India. The company offers a wide range of products such as fans, lighting, and home appliances.

Over the years, it has earned a reputation for reliability and innovation. Crompton remains a key player in the Indian consumer durables market.

Lately, however, the company has been facing heavy headwinds. As a result, Crompton Greaves' share price has tumbled 10.4% over the last month.

Let's take a look at the factors dragging down Crompton Greaves' share price.

Uncertain Outlook

Investors in Crompton Greaves Consumer Electricals are increasingly anxious as the company faces a challenging September quarter (Q2FY25). The management has cautioned analysts about a slowdown in demand for consumer products in the near term.

This warning comes on the heels of a disappointing performance during the Onam festival in Kerala. Onam sales, often considered a reliable indicator of demand trends, declined compared to the previous year, raising concerns about the company's outlook.

One major factor impacting Crompton's current situation is the pre-buying of cooling products in Q1. The intense summer heat and widespread heatwaves led consumers to purchase cooling appliances early in the year. While this boosted sales in Q1, it is now weighing heavily on Q2 earnings.

This imbalance in demand timing is adding to the company's challenges. Additionally, inflationary pressures are further affecting consumer spending, particularly in rural areas where the company has a strong presence.

This decline is not surprising given the broader challenges the company faces. Inflation continues to hurt consumer confidence, leading to weaker sales across segments.

The second quarter is traditionally slower after the busy summer season, but this year, the downturn has been more pronounced due to these combined factors.

The company's near-term outlook remains muted as demand conditions stay soft. With rising costs for everyday goods, consumers are holding back on discretionary spending, including the purchase of electronics and home appliances. This trend is particularly noticeable in rural regions, where inflation has taken a heavier toll on household budgets.

As the festive season kicks off, Crompton hoped for a strong recovery. However, the initial demand during Onam in Kerala has not met expectations, signaling that a full rebound may take longer than anticipated.

Despite a solid performance in the June quarter, driven by broad-based growth, the company now expects demand to recover only in the second half of FY25. Until then, Crompton Greaves faces a challenging few months, with its dull near-term outlook continuing to pressure its share price.

With a slow recovery expected in the second half of the year, the company's share price has tumbled as investors remain cautious about its future prospects.

What Next?

Crompton Greaves expects a rebound in demand in the second half of FY25, with the festive season likely to boost sales. After a strong summer, industry experts anticipate its revenue growth to normalise year-on-year.

In Q1FY25, it achieved a revenue growth of 14%. Stable commodity costs and reduced spending on advertising are expected to support margins during non-seasonal periods.

In the long run, Crompton remains committed to its growth strategy. This includes premiumisation, expanding distribution, and continuous product innovation under its "Crompton 2.0" plan. The company is focused on increasing its market share by becoming more customer-centric.

The introduction of stricter manufacturing standards, particularly with the Bureau of Energy Efficiency ratings, is expected to raise manufacturing costs for fans. However, this may lead to consolidation in the sector, which could benefit organised companies like Crompton.

Crompton is also working on increasing in-house manufacturing for fans and kitchen appliances. The restructuring at Butterfly Gandhimathi Appliances, a key acquisition, is nearly complete. From the second half of FY25, Butterfly's earnings are expected to turn around.

Its operating margin is projected to improve to 7-8% or even reach double digits in the medium term. Crompton has started using Butterfly's manufacturing facilities for mixers and grinders, with plans to do the same for cooktops.

The company is targeting a 10% market share in kitchen appliances over the long term, leveraging the synergies from this acquisition.

The company's long-term strategies aim to capitalise on sector consolidation and strengthen its position in key markets.

How Crompton Greaves Share Price has Performed Recently

In the past five days, Crompton Greaves share price has tumbled 5.3%. In the last month, it has slipped 10.4%.

The stock price has surged 34.5% in the 2024. Additionally, it has rallied 41.1% in the last year.

The stock touched its 52-week high of Rs 483.7 on 2 September 2024 and a 52-week low of Rs 262.1 on 22 March 2024.

About Crompton Greaves

Crompton Greaves Consumer Electricals is a leading player in India's consumer electricals sector. It has a wide portfolio of products, which includes fans, lighting, pumps, and household appliances.

The company dates its origin back to 1947 when L K Thapar, an eminent Indian industrialist, took over Crompton Parkinson Works and Greaves Cotton & Crompton Parkinson. In 1966, the two companies merged to form CG Power and Industrial Solutions.

To know more about the company, you can check out and Crompton Greaves financial factsheet and Crompton Greaves latest quarterly results.

You can also compare Crompton Greaves with its peers:

Crompton Greaves Consumer Elec. vs Bajaj Electricals

Crompton Greaves Consumer Elec. vs Symphony

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