Analysts say cost pressures will also force players to rationalise pricing.
Crompton is adopting cost initiatives such as in-house manufacturing and automation of assembly lines. It has introduced a five-star rated bulb to garner better realisation. The shift from B2B business to B2C is also seen as a positive.
The company is implementing go-to-market (GTM) strategy and, focusing on dealer/distribution model as is the case with peers.
Starting from certain regions, the strategy is expected to cover a majority of the country over the next 12-18 months.
Though in the near term it may again lead to elevated costs or dent market share, analysts say it will create a strong base for sustainable future growth. The company is already witnessing strong traction in regions where GTM is being implemented.
The company’s electrical consumer durables, contributing 75 per cent to revenues and 90 per cent to profitability, continue to do well (23 per cent y-o-y growth in Q1) — driven by fans.
After the Air 360 fan launch being received well, it plans 3-4 new launches moving ahead.
The anti-dust fan is now a Rs 2-billion product category.
In pumps that saw 30 per cent year-on-year growth in Q1 driven by volume, momentum has returned after the Mini Crest product launch.
Motilal Oswal Securities analysts are positive on the firm given a strong product portfolio, established brands, market leadership, wide distribution network and robust return ratios.