Crompton Greaves Q1 PAT seen up 20% at Rs 95 cr

Its EBITDA is seen up 11.7% at Rs 203 crore versus Rs 182 crore, YoY.

Its EBITDA % seen at 7.4% versus 7.5%, YoY.

The company's PAT is seen up 20% at Rs 95.5 crore versus Rs 79.5 crore, YoY.

Crompton Greaves Q1 results: What to expect

Highlights

Crompton is suffering due to weak capex cycle and strained consumer sentiment

Company is also facing severe pricing pressure on low visibility and utilization especially in the power segment

After 4 consecutive disappointing quarters investor mood will change in stock only if it can meet its 3 year margin guidance of 450bps margin expansion

Revenues growth of ~13% YoY in revenues to be driven by a robust order execution in FY12 + Re depreciation which will work favorably for the overseas orders

Margins

Expect overall margins to remain flat YoY at 7.4% (however a slight 50 bps improvement QoQ which will be driven by reduced provisions in international business)

Crompton continues to face margin pressure, particularly in the power business both in domestic and overseas markets

Expect domestic power segment margins to decline by 250 300 bps over last year as Crompton executes low margin orders this quarter

((In FY12, EBITDA margins contracted by 720 bps YoY in the domestic power business and declined by 840 bps to 1.7% in the overseas power business))

PAT

Expect net losses in international businesses to narrow in FY13 effects of which would be visible in Q1FY13

Anticipated turnaround in international subsidiaries and the recovery in overseas business is expected to lead to a 20% earnings growth

Key things to watch out for in the results

Order inflow

Profitability and margins in overseas and domestic power business segments

Any cost rationalization measures to be taken by the company

Brokerages continue to remain largely positive on the stock as they believe margins have bottomed out in FY12 at 7.1%