Crompton Greaves (SELL, 15% upside) - AMBIT

Crompton Greaves will announce its 1QFY14 results today. We expect the company's topline to increase by only 10% YoY to Rs31bn, as the problems in the domestic and overseas power businesses have continued to persist. EBITDA margins would likely decline by 90bps YoY to 5% due to a gross margin decline of 230bps YoY. Consequently, we expect EBITDA to decline by 7% YoY to Rs1.5bn. Further, due to the higher interest burden, PBT would likely decline 17% YoY to Rs1,068mn. However, we expect PAT to remain flat at Rs855mn on account of lower tax provision (20% vs 34.4% in 1QFY13). The stock is currently trading at 10.5x FY14E earnings.

Source : Equity Bulls

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