Crompton-Havells gap to narrow

Valuation gulf not justified, seen as normalising

Crompton Greaves Consumer Electricals scrip has lagged that of peer Havells India in the past one month as investors cheered acquisition of Lloyd Electric’s consumer durables business by the latter. Part of this weakness can be attributed to profit-booking following a 52 per cent surge over the past one year, outperforming Havells’ 25 per cent gains. But, even after this, Crompton trades at a discount to Havells. Currently, Crompton trades at 37 times the FY18 estimated consolidated earnings as against 42 times for Havells. Experts believe this valuation gap between the two stocks is not justified and should normalise. Naveen