Buy Greaves Cotton - Kotak

We take stock of the 3W Light Commercial Vehicle (LCV) volumes in the month of Jan-Feb 2013. After notching a healthy growth in January 2013, 3W volumes were weak in Feb 2013. However, volumes of Magic Iris (0.5 ton 4W LCV) have remained strong.

We note that even in a scenario of weak industry outlook, the company is able to generate high ROE of 20% plus and strong free cash flow. Given these credentials and recent price fall, we maintain BUY with an revised DCF based price target of Rs 92 (Rs 96 earlier).

Risks and Concerns: Sustained slowdown in economic growth.

Source : Equity Bulls

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