Stocks To Buy — Motilal Oswal projects a 77% 'bull case' upside on this consumer durables stock

Shares of Crompton Greaves Consumer Electricals Ltd. gained nearly 5% on Thursday, December 18, after brokerage firm Motilal Oswal Financial Services Ltd. initiated coverage on the stock, projecting a 40% upside potential from its previous close.

Motilal Oswal initiated coverage with "buy" rating on Crompton Greaves Consumer Electricals with a price target of ₹350 per share.

Crompton 2.0 unlocking potential

The company launched 'Crompton 2.0' in June 2023, which emphasised a renewed focus on revenue growth and improvement in profitability. Motilal Oswal believes Crompton 2.0 is unlocking its potential, and its renewed focus on revenue growth will drive profitability. It said the strategy entails substantial investments in growth initiatives, including people and process capabilities, brand reinforcement, consumer-driven innovation, and advanced go-to-market strategies.

Better Earnings

The brokerage has estimated an earnings before interest, tax, depreciation and amortisation (EBITDA) and profit after tax (PAT) compound annual growth rate (CAGR) of 17% and 21%, respectively over FY26-28, after both estimated to have declined 12% and 16% respectively in FY26 — primarily because of weather-related disruptions, which impacted the electrical consumer durables (ECD) segments' performance.

The brokerage has estimated Crompton Greaves Consumer Electricals to report 8% revenue CAGR over FY26-28, with 8% in ECD, 6% in lighting and 10% in Butterfly Gandhimathi Appliances (BGAL).

Motilal Oswal has estimated Crompton Greaves Consumer Electricals' gross margin to improve over FY27-28, led by the company's pricing strategies, product premiumisation and cost-efficiency measures. The analyst expects the operating profit margin to be 10.3% in FY27 and 11.2% in FY28 compared to 9.7% in FY26.

Butterfly Investment Betters Portfolio

It also said the company's additional 55% acquisition in Butterfly Gandhimathi Appliances in March 2022 has allowed it to expand its appliances portfolio.

Crompton Greaves Consumer Electricals currently holds 75% stake in the firm. The company anticipates realising various revenue and cost synergies in the short to medium term and plans to leverage mutual strengths to expand its industry share and market reach, the analyst said.

"We believe that higher investments in advertisement and promotional spending, along with its efforts to improve the brand strength and product portfolio, will bolster the future growth trajectory," Motilal Oswal said in its note.

Key DownSide Risks

The key downside risks for the stock are high competitive intensity and a possible dip in demand due to the economic slowdown, Motilal Oswal said.

Bull Case Scenario

In its bull case estimate, Motilal Oswal has a price target of ₹460, which projects a 77% upside potential from Crompton Greaves Consumer Electricals' current market price.

Motilal Oswal factors in margin recovery in the ECD segment to be higher in the second half and a higher revenue, EBITDA and PAT CAGR of 9%, 20% and 25% respectively over financial year 2026-2028.

Stock performance

Of the 37 analysts who have coverage on the stock, 34 have a "buy" rating, two have a "hold" rating and one has a "sell" rating.

Shares of Crompton Greaves Consumer Electricals were trading 4.6% higher on Thursday at ₹260.6. The stock has had a forgettable year in 2025, having declined 30.6% so far.

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