CMP* (Rs) 242 Upside/ (Downside) (%) 2. Market Cap. (Rs bn) 157 Free Float (%) 65.6 Shares O/S (mn) 630

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4QFY17 Result Update June 02,2017 Market Cap. (Rs bn) 157 Free Float (%) 65.6 Shares O/S (mn) 630 Decent Performance to Continue; Maintain Crompton Greaves Consumer Electricals (CGCEL) has delivered a decent performance in 4QFY17. Its net sales grew by 7.4% YoY to Rs10.7bn matching our expectation of Rs10.7bn. Led by betterthan-expected expansion in operating margin, its EBITDA and adjusted net profit grew by 9% YoY and 29.8% YoY to Rs1386mn and Rs864mn, respectively. Apart from expansion in margin, higher other income (Rs160mn in 4QFY17 vs. Rs69mn in 4QFY16) aided earnings growth. Looking ahead, we believe that the expected strong double-digit growth in light electrical industry augurs well for CGCEL. Rolling over our estimates to FY19E, we maintain our recommendation on the stock with an upwardly revised Target Price of Rs246 (from Rs178 earlier). Key Results Highlights Segmental Revenue Performance: Consumer Electrical segment that contributes ~66% to CGCEL s total revenue grew by 8.2% YoY owing to strong growth in fans category. Sales volume of premium fans grew by a strong 23% YoY and contributed 16% to the fan biz in 4QFY17. Revenue from Lighting Segment accounting for 28% of CGEL s total top-line grew by 5.4% YoY in 4QFY17. In Lightning business, LED segment grew by 50% YoY, which now stands at ~64% of total lightning sales. Ex-EESL, lighting business grew by a healthy 14% YoY. Share price (%) 1 mth 3 mth 12 mth Absolute performance 9.5 28.0 75.0 Relative to Nifty 5.9 19.6 57.5 Shareholding Pattern (%) Dec'16 Mar'17 Promoter 34.4 34.4 Public 65.6 65.6 1 Year Stock Price Performance 250 230 210 190 Segmental Margin Performance: Margin expansion was driven by consumer durables segment, which witnessed 130bps YoY rise in EBIT margin owing to product-mix in favour of premium fans. Lighting segment witnessed 5.4% growth with 110bps YoY expansion in margin due to higher sales of CFL and traditional bulbs both in terms of volume and value. 170 150 130 Jun-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 May-17 Margins Continue to Improve: With a view to strike a right balance between growth and margins to ensure channel de-stocking, the Company rolled back channel incentives, which was implemented during demonetization. Though this strategy led to a slowdown in primary growth vis-à-vis peers, it ensured robust expansion in margin profile. Further, despite high ESOP cost of Rs113mn its overall EBITDA margins improved by 18bps YoY owing to higher growth in premium segment and several cost-control initiatives. Note: * CMP as on June 01, 2017 Outlook & Valuation We expect CGCEL s revenue and earnings to witness 16.4% and 23.5% CAGR, respectively over FY17-19E driven by strong product portfolio with established brand, market leadership and strong distribution network. CGCEL is expected deliver ROCE in the range of 30-40% during the same period. Though GST roll-out might create some volatility in the stock price in the near-term, we believe that the new tax regime to be positive in the long-term. Valuing at 35x P/E to its FY19E EPS, we reiterate our recommendation on the stock with an upwardly revised Target Price of Rs246. Key Financials (Rs mn) FY16 FY17 FY18E FY19E Sales 35,869 39,759 46,071 53,899 EBITDA 4,328 4,902 5,943 7,061 Net profit 2,285 2,907 3,606 4,430 EPS Rs) 3.6 4.6 5.7 7.0 P/E (x) 66.7 52.4 42.2 34.4 P/B (x) 66.4 28.1 20.5 14.2 EV/EBITDA (x) 36.2 32.3 26.5 22.2 ROE (%) 99.7 53.6 48.5 41.2 Source: Company, RSec Research Research Analyst: Rupesh Sankhe Contact: (022) 3320 1606 Email: rupesh.sankhe@relianceada.com 1

Risks to the View Increase in cheaper imports from China would dent pricing power and margins. Slower-than-expected recovery in consumer demand. Exhibit 1: Result Summary (Rs mn) 4QFY17 4QFY16 % yoy 3QFY17 % qoq Net Sales 10,762 10,016 21.1 8,889 7.4 Operating Costs 9,376 8,745 18.7 7,896 7.2 EBIDTA 1,386 1,272 39.5 993 9.0 EBIDTA Margin (%) 12.9 12.7 11.2 - Other Income 69 16 36.5 50 319.5 Interest 153 176 (6.0) 162 (13.0) Depreciation 29 33 9.9 26 (12.4) Profit Before Tax 1,252 987 46.5 855 26.9 Tax 388 321 281 Tax Rate (%) 31.0 32.5 32.9 Reported PAT 864 666 50.7 574 29.8 Source: Company RSec Research 2

Profit & Loss Statement Y/E March (Rs mn) FY16 FY17 FY18E FY19E Net Sales 35,869 39,759 46,071 53,899 Raw Materials 12,702 27,349 31,651 36,975 Employee Costs 1,005 2,252 2,534 2,911 Other Expenditure 2,315 5,257 5,943 6,953 Total Expenditure 31,541 34,857 40,128 46,838 EBIDTA 4,328 4,902 5,943 7,061 Other Income 4 195 9 10 Depreciation 126 110 140 135 EBIT 4,206 4,987 5,812 6,936 Interest 678 655 586 515 Extraoridanry -105-25 PBT 3,423 4,306 5,226 6,421 Tax 1,138 1,399 1,620 1,990 PAT 2,285 2,907 3,606 4,430 PAT Margins % 6.4 7.3 7.8 8.2 EPS 3.6 4.6 5.7 7.0 Balance Sheet Y/E March (Rs mn) FY16 FY17E FY18E FY19E Share Capital Equity 1,259 1,259 1,259 1,259 Reserves 1,034 4,166 6,169 9,493 Net Worth 2,293 5,425 7,428 10,752 Secured Loans 5,172 6,500 5,800 5,100 Unsecured Loans 146 176 176 176 Total Debt 5,318 6,676 5,976 5,276 Total 7,611 12,101 13,404 16,028 Net Block 8,581 8,640 10,000 11,065 Investments 3,185 3,185 3,185 Current Assets 7,949 9,351 9,790 10,443 Inventory 2,100 2,348 2,498 2,648 Sundry Debtors 4,165 5,434 5,554 5,729 Cash 900 700 827 1,096 Loans & Advances, Prepaid Exp 784 869 910 970 Current Liabilities & Provisions 6,921 7,781 7,575 6,671 Creditors 6,641 7,145 7,295 6,391 Provisions 280 635 280 280 Others 2,004 1,302 2,004 2,004 Net current Assets 1,028 1,570 2,215 3,772 Total 7,611 12,101 13,404 16,028 3

Cash Flow Statement Y/E March (Rs mn) FY16 FY17E FY18E FY19E Net Income/(loss) before Tax & EO items 3,423 4,306 5,226 6,421 Depreciation and Amortization 126 110 140 135 Interest Expense 678 655 586 515 Operating profit before WC Changes 4,227 5,072 5,952 7,071 Net Change in Working Capital 24,819 (743) (517) (1,289) Cash generated from Operationing Activi. 29,046 4,329 5,435 5,781 Taxes paid (1,138) (1,399) (1,620) (1,990) CF before Extra - Ordinary items 27,908 2,930 3,815 3,791 Net CF From Operating Activities 27,908 2,930 3,815 3,791 Purchase of Fixed Assets 49,475 (170) (1,500) (1,200) Purchase of Investment 4,414 (3,185) - - Adj. on acquisition of subsidiary/associ. 9,468 249 - - Net CF From Investing Activities 63,356 (3,106) (1,500) (1,200) Increase/(Decrease) of borrowing (20,469) 1,358 (700) (700) Dividend Paid - (727) (901) (1,108) Interest paid (678) (655) (586) (515) Net CF From Financing Activities (21,147) (25) (2,187) (2,323) Increase/(Decrease) in cash 70,117 (200) 128 268 Cash at the beginning of the year 1,291 900 700 827 Cash at the end of the year 900 700 827 1,096 Key Ratios Y/E March FY16 FY17E FY18E FY19E EBITDA margin (%) 12.1 12.3 12.9 13.1 RoE (%) 99.7 53.6 48.5 41.2 RoCE (%) 38.9 29.4 29.9 29.9 EV / sales (x) 4.4 4.0 3.4 2.9 EV / EBITDA (x) 36.2 32.3 26.5 22.2 P/E (x) 66.7 52.4 42.2 34.4 P / BV (x) 66.4 28.1 20.5 14.2 4

Rating Guides Rating Expected absolute returns (%) over 12 months BUY >10% -5% to 10% REDUCE >-5% Reliance Securities Limited (RSL), the broking arm of Reliance Capital is one of the India s leading retail broking houses. Reliance Capital is amongst India s leading and most valuable financial services companies in the private sector. Reliance Capital has interests in asset management and mutual funds, life and general insurance, commercial finance, equities and commodities broking, wealth management services, distribution of financial products, private equity, asset reconstruction, proprietary investments and other activities in financial services. The list of associates of RSL is available on the website www.reliancecapital.co.in. RSL is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014 General Disclaimers: This Research Report (hereinafter called Report ) is prepared and distributed by RSL for information purposes only. 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