View Full Version : Crompton Greaves Ltd (NSE:CROMPGREAV) (BSE:500093)

07-30-2015, 12:34 PM
Crompton Greaves Limited is an India-based electrical company. The Company provides end-to-end solutions to utilities, industries and consumers for the management and application of electrical energy. It operates through four segments: power systems, including transformer, switchgear, turnkey projects and power supervisory control and data acquisition systems (SCADA); consumer products, including fans, appliances, luminaries, light sources and pumps; industrial systems, including electric motors, alternators, drives, drives solutions, traction electronics and SCADA, and others, including power distribution, self-adhesive tapes and specialty labels. The Company provides services, such as retrofit and maintenance solution, measurement and diagnostics of electrical systems, field services, spare parts sale, training related services, condition monitoring and training modules for maintenance, among others.

Official website: www.cgglobal.com

07-30-2015, 12:37 PM
For 1QFY2016, Crompton Greaves (CG) reported a disappointing set of number. Its top-line, on a consolidated basis, de-grew by 8% yoy to Rs3,166cr and was below our estimates. On the EBITDA front, the companys margin declined by 252bp yoy to 2.5%, which is lower than our estimate of 4.7%. The underperformance is due to loss incurred in the domestic power system business and widening losses in international operations. However, the net profit was supported by foreign exchange gain of Rs52.8cr; but still, it declined sharply by 75% yoy to Rs16cr. Power segment dragged standalone performance: CG’s standalone top-line saw a de-growth of 3.4% yoy to Rs1,840.5cr. The de-growth was mainly on account of the weak performance by the power segment as its net sales declined by 34% yoy to Rs390cr. The fall in the power segment revenue was due to a strike at the Nasik factory, delay in dispatch of an export order as customer site was not operational, and due to change in product mix as the share of the lower rating transformers increased. The Management has indicated these as one-off things and expects the power segment to operate at normal levels from 2QFY2016 onwards. Revenue from the industrial systems segment grew by 10.2% yoy to Rs382cr. The EBITDA margin on a standalone basis declined by 296bp yoy to 6.0%. Consumer business going strong: CG’s consumer products business’ sales saw a growth of 12.7% yoy to Rs971cr. The same was mainly on the back of strong growth in fans (up 9.6% yoy), pumps (up 11% yoy) and lighting (up 15.8% yoy) sub-segments. The business’ EBIT margin improved by 167bp yoy to 14.3%, mainly due to a better mix. Outlook and Valuation: CG is in the midst of business restructuring process as it is planning to sell-off its international power business while the consumer business’ demerger will unlock shareholders value. Given the attractive valuation (stock trading at 0.9x FY2017E EV/Sales compared to its five year trading range of 0.5x to 1.5x), we maintain our Accumulate recommendation on the stock. We have assigned a multiple of 1.1x EV/Sales to arrive at a target price of Rs204.

Source: http://www.angelbroking.com