Crompton Greaves Q3 profit margin may drop 540 bps: Poll

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Crompton Greaves will announce its third quarter earnings (October-December) today. Here is what the CNBC-TV18 poll of analysts expects from the company.

Earnings Q3FY14 Y-o-Y consolidated-Net sales may go up 11.1 percent to Rs 3,301 crore versus Rs 2,972 crore-EBITDA may rise to Rs 182 crore versus Rs 2 crore-EBITDA margin may drop to 0.1 percent versus 5.5 percent-PAT may be at Rs 79.4 crore as against reported loss of Rs 189 crore (and last year's adjusted loss of Rs 68.3 crore)

Factors to watch out for-Company is likely to report moderate consolidated revenue growth of about 11 percent Y-o-Y led by standalone consumer and industrials business and some pick up in power segments-Exports are likely to show some improvement in Q3 on the back of favourable currencies-Company is likely to benefit from increased execution in international subsidiaries-Overseas losses may decline due to company’s continuous cost reduction drive-Expected turnaround in international subsidiaries (inline in management guidance) is likely to result in smart revival in margins on Y-o-Y basis. Analysts expect margins to uptick even on Q-o-Q basis (by 50 bps)

Company’s international business problems-Currently, management has guided for October-March period of FY14 to be EBIT positive for its international business as against negative EBIT of Rs 81 crore in April-September-In the medium term, company expects to improve to a level of 3-5 percent (i.e. over FY15 expected and FY16 expected)-Potential for disappointment does exist given the past track record and the continued overhang from a weak global macro environment Meanwhile, Crompton Greaves announced a buyback upto Rs 270 crore within a year from July 2013. Since then, the company has bought back 1.18 million shares (1.8 percent equity) at an average price of Rs 83 apiece. 84 percent of the buyback has been done between Rs 81-84 apiece and 14 percent at Rs 85-88 apiece. While the buyback has provided some near-term support to the stock while concerns remain on margin pressure.