Crompton Greaves Q2 cons PAT seen down 33% at Rs 144 cr

Crompton Greaves is expected to report a fall of 33% YoY in consolidated profit after tax of Rs 144 crore in the July-September quarter of 2011. The company had posted a profit of Rs 213 crore in the corresponding quarter of last fiscal.

Earnings before interest, tax, depreciation and amortisation (EBITDA) too are likely to go down by 30% to Rs 233 crore from Rs 333 crore during the same period.

Operating profit margin is seen falling at 9% as against 13.90% in the quarter ended September 2011.

Net sales are seen going up by 8% to Rs 2,591 crore from Rs 2,398 crore year-on-year.

In the first half of the financial year 2011-12, Crompton is likely to post a growth of 7% year-on-year in consolidated net sales of Rs 5,029 crore as against Rs 4,700 crore in the corresponding quarter of last fiscal.

PAT is expected to go down by 45% to Rs 224 crore from Rs 404 crore during the same period. EBITDA too is seen going down by 34% to Rs 415 crore from Rs 630 crore.

Operating profit margin is expected to be at 8.26% as against 13.42% year-on-year.

Street expectations dim post Q1FY12

-Expect YoY revenues growth to be weak on the back of weak order inflows over the past few quarters

-Slight revenue growth driven by steady execution of the existing orders in hand

-Expect power systems growth to remain subdued

-Industrial segment to grow moderately on account of slowdown in overall activity

-International revenues may benefit slightly from rupee depreciation seen towards the end of Q2

-Expect order intake to have remained subdued in Q2 ((Order intake for Q1FY12 was Rs 2250 crore))

-Management maintained cautious demand outlook for FY12 in general

-Management had mentioned that it expected to bag some orders from PGCIL which do not seem to have come through yet

Margin pressure to continue

Slight margin improvement expected on lower commodity prices + absence of low margin Nelco orders

Key factors to watch for ---

-Rising competitive intensity in high voltage segment a key concern

-Power systems margin in India and Europe a key factor to watch out for