CG Consumer’s Q3FY18 recurring PAT at Rs 695 mn, +28% y-o-y, was in line with our estimate at `704 mn. Adjusted sales grew 12% y-o-y driven by growth in the lighting business. Ebitda margin expanded 136bps y-o-y to 12.4%.
Lighting business continues to shine bright — Lighting revenue grew 23%
y-o-y on a GST adjusted like-for-like basis. It is noteworthy that the LED business, which is the focus area within the segment, grew a strong 57% y-o-y. The company currently has 10-12% market share in the business and has achieved a number 2 position, behind market leader Philips.
Continues to strengthen premium fan positioning — Premium fans registered healthy 28% y-o-y growth largely driven by volume growth. Notably, CG Consumer touched a record market share of 28% in fans recently. Premium fans now contribute 20% to the fan sales. The company’s unique consumer proposition of ‘anti-dust’ fans continues to be a success.
Performance of other electric consumer durables mixed — Management indicated that the growth rate in the domestic pumps business has tapered off due to heightened competitive intensity; it has also intervened by launching products under the Crest Mini brand and has already seen initial signs of success. In the geyser business, the company faced volume decline; on geysers and coolers, the management’s intent continues to be to achieve at least the # 2 market position.
Implications — Maintain Buy with a target price of `327. We estimate an EPS CAGR of 22% over FY17-20E and an RoE of 50%.