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Stock to BUY: Shares of Crompton Greaves Consumer Electricals Ltd. climbed nearly 5 per cent in Thursday’s trade on December 18 after domestic brokerage Motilal Oswal Financial Services initiated coverage on the stock with a ‘Buy’ rating, citing strong earnings visibility and a potential 40 per cent upside from the previous close.

Motilal Oswal has set a target price of Rs 350 per share, banking on the company’s ongoing transformation under its ‘Crompton 2.0’ strategy, launched in June 2023. The brokerage said the revamped strategy marks a decisive shift towards accelerating revenue growth while steadily improving profitability.

According to the brokerage, Crompton 2.0 is beginning to unlock the company’s operating potential. The strategy focuses on higher investments in people and process capabilities, stronger brand reinforcement, consumer-driven innovation and sharper go-to-market execution. These initiatives are expected to support market share gains across categories while aiding margin expansion over the medium term.

Motilal Oswal expects Crompton’s earnings to recover meaningfully after a weak FY26, which is projected to see declines due to weather-related disruptions that impacted the electrical consumer durables segment. Over FY26–28, the brokerage estimates EBITDA and profit after tax CAGR of 17 per cent and 21 per cent, respectively.

Revenue is projected to grow at an 8 per cent CAGR over the same period, led by 8 per cent growth in electrical consumer durables, 6 per cent in lighting, and 10 per cent in Butterfly Gandhimathi Appliances.

The brokerage expects margins to improve gradually, supported by pricing actions, product premiumisation and cost-efficiency measures. Operating profit margin is estimated to rise to 10.3 per cent in FY27 and 11.2 per cent in FY28, compared with 9.7 per cent in FY26.

Motilal Oswal also highlighted Crompton’s deeper presence in the appliances space following its additional 55 per cent acquisition in Butterfly Gandhimathi Appliances in March 2022. The move has helped diversify the portfolio and strengthen Crompton’s position in high-growth kitchen appliance categories.