Crompton Greaves - Q4FY13 Result Update - Nirmal Bang

- Crompton Greaves (CGL) posted consolidated revenue of Rs33.8bn in 4QFY13, up 10% YoY, in-line with our/Bloomberg estimates, respectively. However, higher than expected margin pressure in domestic power systems segment and losses in its international operations dragged down profitability.

- EBITDA fell 63% YoY to Rs779mn while PAT declined 75% YoY to Rs253mn, 68%/66% below our/Bloomberg consensus, respectively. Consequently, we revise downwards our earnings estimates for FY14E by 40%.

- On the positive side, CGL continues to offer healthy revenue visibility driven by strong order book, up 9% YoY to Rs91bn.

- Post completion of its restructuring exercise at Belgium, recovery in operating margin will be the key valuation driver for the stock, in our view.

- Following recent correction in the stock price of CGL, our rating stands upgraded to Hold from Sell with a revised target price of Rs105 (Rs100 earlier) based on 12xFY15E EPS as we roll forward our valuations to FY15E.

Source : Equity Bulls

Keywords