Crompton Greaves Consumer Electricals: Navigating Q2 FY26 with Strategic Shifts and Solar Ambitions

Crompton Greaves Consumer Electricals Limited, a household name in India, has unveiled its Q2 FY26 performance, showcasing a period of strategic recalibration amidst challenging market dynamics. The company reported consolidated net sales of Rs. 1,916 crore, marking a modest 1.0% year-on-year growth. Despite this, profitability saw a dip, with consolidated EBITDA at Rs. 158 crore, a 22.2% decline YoY, and Profit Before Tax (PBT) at Rs. 102 crore, down 40.1% YoY. The quarter was characterized by an extended monsoon impacting cooling product sales, rising commodity prices, and significant investments in long-term growth initiatives.

Segmental Performance: Mixed Fortunes

The Electrical Consumer Durables (ECD) segment, which includes fans, pumps, and small domestic appliances, recorded revenues of Rs. 1,371 crore. While pumps and small domestic appliances (SDA) showed strong traction, the fans category experienced de-growth due to prolonged monsoons. Management highlighted strong double-digit growth in the BLDC fan segment and the kitchen business, which combines Butterfly and large kitchen appliances, is now the second-largest kitchen business in the country, growing at a double-digit rate. However, margin contraction in ECD was noted due to commodity price increases and adverse market conditions in large domestic appliances (LDA) and table, pedestal, and wall (TPW) fan segments. The company has initiated pricing actions, including a 1.4% increase in the fans business, to address these pressures.

The Lighting segment demonstrated a robust turnaround, with revenues growing 3.1% YoY to Rs. 261 crore and EBIT surging 50% YoY. EBIT margins expanded by 480 basis points to 15.5%. This improvement was driven by a strategic reorientation of the product mix towards higher-margin products like panels and floodlights in B2C, and an increased focus on industrial projects in B2B, reducing reliance on government exposure. The company also undertook manufacturing cost optimization, including restructuring its Baddi and Baroda units.

Butterfly, the kitchen appliances brand, delivered a strong Q2 performance with revenues rising 14% YoY to Rs. 293 crore. EBITDA margin expanded by 60 bps YoY to 9.5%, and EBIT grew 29% YoY. This growth was attributed to strong channel execution, new product launches, premium offerings, and disciplined cost management. The GST reduction and festive season also provided buoyancy in kitchen categories.

Financial Summary (Consolidated - Q2 FY26)

Strategic Initiatives and Future Outlook

Crompton is aggressively pursuing its 'Crompton 2.0' transformation, focusing on consumer centricity, premiumization, supply chain excellence, Go-to-Market (GTM) strategies, and digital enablement. A significant highlight is the rapid expansion of its solar business. The company has secured approximately Rs. 500 crore in solar rooftop orders, covering about 50,000 units, and expects this segment to contribute around Rs. 2,000 crore in revenue within the next 18-24 months, potentially becoming its second-largest business. The solar pumps business continues its strong growth trajectory, expanding its market share to 6-8% nationally within two years, growing at over 100% YoY.

To enhance manufacturing efficiency, the Baroda facility underwent restructuring, shifting from a single product line (lighting) to multiple, including BLDC PCBs, appliances, and solar rooftop components. This initiative, costing Rs. 20.36 crore, is expected to have a payback period of less than two years. The company also launched an extensive Long-Term Incentives (LTI) plan for ~150 leadership employees, aligning their interests with sustained value creation.

Segment Contribution (Q2 FY26)

Management Commentary and Investor Confidence

Management expressed confidence in their strategic direction, emphasizing their leadership in the ceiling fan market and the high growth potential of the solar business. They highlighted that the solar business offers strong profitability and high Return on Capital Employed (ROCE). The company is also preparing for the BEE 2.0 transition in fans, aiming to optimize inventory and introduce new B-rated fans. The focus remains on driving premiumization and strengthening distribution across all categories. The management's transparent communication regarding margin pressures and proactive measures to address them reinforces investor trust.

Crompton Greaves Consumer Electricals is clearly in a phase of dynamic transformation. While short-term challenges impacted profitability, the strategic investments in solar, manufacturing efficiency, and GTM revamp position the company for sustained long-term growth and market leadership.