198 MF schemes own over 47% stake in this BSE500 firm; worth a buy?

A total of 198 mutual fund (MF) schemes held nearly half of stake in a BSE500 firm at the end of May. The stock, which has fallen 14 per cent in the past one year, has 25 'Strong Buy' recommendations, 4 'Buy', 2 'Hold' and one 'Strong Sell'  call, as per data available with Trendlyne. 

Elara Securities finds the stock worth Rs 470. Goldman Sachs and JM Financial have targets of Rs 420 each on the stock. Kotak has a 'Buy' rating and a fair value of Rs 410 for the stock. This is Crompton Greaves Consumer Electrical Ltd. 

On Friday, the scrip was quoting at Rs 357.85 apiece. The targets on the stock suggested 13-31 per cent potential upside ahead.

HDFC Mutual Fund - HDFC S&P BSE 500 ETF (9.57 per cent), Nippon Life India Trustee Ltd - A/c Nippon India Growth (6.15 per cent), Mirae Asset Nifty India Manufacturing ETF (6.03 per cent) and UTI Aggressive Hybrid Fund (3.07 pre cent) were among MF schemes with significant stakes in the company. as of March 31.

In total, 36 mutual funds owned 47.38 per cent in Crompton Greaves as of March 31, the highest for any BSE500 company. At the end of May, a total of 198 schemes held shares of Crompton Greaves, data compiled from corporate database AceEquity showed.

Goldman Sachs expects the June quarter to be lacklustre for Crompton Greaves, with cooling products’ sales not
picking up amid early onset of monsoons, partially offset by good growth in pumps and healthy growth in Butterfly (on a weak base). 

It believes margins should show YoY improvement on profitability in lighting and Butterfly as well as lower commodity prices.

Investors, it said, would look for more clarity on timelines of rooftop solar launch, any new category announcements as well as initial traction of new innovation platforms. 

"We cut our topline estimates by 1-2 per cent across FY26-28E on weaker summer product sales and continued price erosion in lighting, and with lower operating leverage than earlier anticipated, our EPS estimates reduce by 3-7per cent during the same period. Our target multiple remains unchanged, and we remain Buy on Crompton with a TP of Rs 420 (from Rs 440) on favourable risk-reward," Goldman Sachs said on June 19.

Crompton management, in a recent meeting with Elara Securities, reaffirmed its focus on innovation-led growth under its Crompton 2.0 strategy. The company continues to lead in residential pumps and has rapidly scaled its solar pumps business to Rs 2,000 crore in a year, citing strong government support and long-term potential in the Rs 1.3 lakh crore market. 

Geysers and coolers are expected to grow 12–15 per cent annually, while the small domestic appliances segment, currently at Rs 4,000 crore, is projected to grow 15–18 per cent. 

In fans, Crompton aims to raise premium share from 25 per cent to 40 per cent and sees BLDC fans growing at 25–30 per cent. It sells over 20 million fans annually, well ahead of competitors. 

The company has entered the solar rooftop space and is also expanding in large kitchen appliances. Crompton is working on in-house PCB development to support its BLDC portfolio, Elara Securities said.

Elara said Crompton is a market leader in residential pumps and has rapidly scaled its solar pumps business to Rs 2,000 crore within a year, supported by strong demand and government backing under the PM-KUSUM scheme. 

While margins in solar pumps are currently lower than in the ECD segment, the business remains ROCE-accretive with room for margin expansion, it said.

Its Rs 4,000 crore small appliances segment, which includes nearly 1.5 million mixer-grinder sales, is expected to grow at 15–18 per cent. Crompton has also entered the premium large kitchen appliances segment with chimneys and hobs, driving future growth, Elara Securities noted.