Crompton Greaves Consumer Electricals, one of India’s leading fast moving electrical goods (FMEG) companies, witnessed a 14.24% drop in its share price to ₹252.35, reaching a new 52-week low, during Tuesday's trading session. This drop occurred after the company announced changes to its top management.
The company announced on Monday via an exchange filing that Mathew Job has resigned from his position as the company’s CEO and Executive Director to pursue other career interests. He stepped down from his role as the Executive Director on April 24, 2023, and will step down as the CEO on April 30, 2023.
The board has appointed Promeet Ghosh as the company's new Managing Director & CEO, effective May 1, 2023, the company said in a filing.
Further, Shantanu Khosla has been appointed and elevated as the Executive Vice Chairman for a period of one year from May 1, 2023, till April 30, 2024, and thereafter as 'Non-Executive Vice Chairman' till December 31, 2025, it said.
He will be relinquishing his position as the company's Managing Director with effect from the close of business hours on April 30, 2023, the company added.
Meanwhile, the stock has been on a downward trajectory since hitting its 52-week high of ₹429 apiece in September last year and has since lost nearly 40% of its value.
On March 24, 2023, the company announced a merger with its south India-focused subsidiary, Butterfly Gandhimati Appliances Ltd. (Butterfly is among the top three kitchen and small domestic appliances players in India), which it acquired in 2022 with plans to strengthen its position in the southern market.
Upon merger, the public shareholders of Butterfly as on the record date will receive 22 equity shares of Crompton for every 5 equity shares held by them in Butterfly.
The management claimed that the company's merging with Butterfly would speed up and smooth out the synergies generated by the combined company. Additionally, it would combine Butterfly's public shareholders at the parent level and streamline Butterfly's business and governance structure.
Revenue synergies are expected to materialise with little segment overlap through cross-selling products across channels and a quick go-to-market strategy. Due to this, Crompton should be able to meet its internal goal of a double-digit increase for Butterfly, according to the company's management.
Following the merger announcement, brokerage firm ICICI Direct Research kept its 'buy' rating on the stock with a target price of ₹335 apiece.
According to the brokerage, the merger presents several advantages, including the achievement of revenue and cost synergies resulting from the pooling of resources. Additionally, the combined business will have a more robust focus on appliance products with a wider geographic presence.
The merger will streamline and simplify the business structure, leading to increased operational efficiency, it stated.
39 analysts polled by MintGenie on an average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.