Moneycontrol
Feb 17, 2017 02:47 PM IST | Source: Moneycontrol.com

Buy Greaves Cotton; target of Rs 170: ICICI Direct

ICICI Direct is bullish on Greaves Cotton has recommended buy rating on the stock with a target price of Rs 170 in its research report dated February 16, 2017.

Buy Greaves Cotton; target of Rs 170: ICICI Direct


ICICI Direct's research report on Greaves Cotton


Greaves Cotton (GCL) reported decent Q3FY17 numbers that were higher than out estimates on topline and bottomline front. However, margins were slightly lower than our estimates. Though demonetisation had a negative impact on the auto segment, the same was cushioned with strong growth in aftermarket and auxiliary power segment (power gensets).


Outlook


With strong growth in non-auto revenues and bounce back of auto segment revenues (led by price hikes of new BS IV engines), we forecast revenues will grow 14% YoY. Other positives like robust cash flow generation, cash rich balance sheet and reasonable yield will cushion against soft topline performance. We continue to rate the stock as BUY and maintain our target price of Rs 170/share.

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