Feb 15, 2017 12:53 PM IST | Source: Moneycontrol.com
Sell Crompton Greaves; target of Rs 45: Motilal Oswal
Motilal Oswal is bearish on Crompton Greaves has recommended sell rating on the stock with a target price of Rs 45 in its research report dated February 12, 2017.
Motilal Oswal's research report on Crompton Greaves
Standalone revenues rose 10% YoY to INR 11.6b (estimate of INR 10.4b), driven by 16.2% growth in the industrial segment. EBIDTA margin at 6.6% were in-line with our estimate of 6.6%. PAT of INR 0.8b was ahead of our estimate of INR 0.2b led by higher than estimated other income (INR 585m vs. estimate of INR 220m) and tax write back taken by the company (INR 112m write back as against estimate of INR 179m tax payment).
We cut our estimates for FY17/FY18 by 52%/10% to factor in the sale of ZIV and higher interest costs in Q317; we would revisit our numbers once we get more clarity on the sales/closure of the overseas T&D businesses. We roll over to FY19 but maintain our SELL rating with a target price of INR 45 (20x its FY19E EPS, in line with five year average). Key upside risks to our rating are: a) Sale of Overseas T&D business; and b) a sharp fall in competitive intensity in domestic T&D segment.
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