Moneycontrol
Last Updated : Oct 29, 2018 02:17 PM IST | Source: Moneycontrol.com

Brokerage houses remain positive, but cut target on Crompton Consumer after Q2 earnings

Credit Suisse cut its earnings estimate for Crompton by 9-13 percent to reflect sharp cut in lighting margin and expects a recovery in growth & margin hereon.

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Brokerage houses continued to be positive on Crompton Greaves Consumer Electrical, but slashed target price and earnings estimates after second quarter results.

Credit Suisse cut its earnings estimate by 9-13 percent to reflect sharp cut in lighting margin and expects a recovery in growth & margin hereon.

It has maintained outperform call on the stock and slashed target price to Rs 280 from Rs 320 earlier.

Macquarie also has outperform call on the stock but cut target to Rs 268 from Rs 300 earlier.

Management expects lighting margin to rebound led by recent price hikes, the research house said, adding mini-crest pumps helped regain market share and water heaters & air coolers will aid growth.

While having a buy call, Citi reduced its target for the stock to Rs 264 from Rs 291 earlier following a cut in EPS estimates by 2-3 percent for FY19-21 and factoring in 1-2 percent lower sales & 24-39 bps margin reduction.

The research house feels the worst in terms of pricing pressure in lighting might be behind. After the recent correction, stock looks reasonably valued, it said.

Crompton Greaves has reported a 8.6 percent on year growth in second quarter profit to Rs 77 crore and 8.1 percent growth in revenue to Rs 1,037.8 crore.

EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 2.6 percent to Rs 123.9 crore but margin contracted by 70 bps to 11.9 percent compared to year-ago.

Kotak Institutional Equities said Crompton reported weak Q2 results with only 3 percent YoY EBITDA growth and overall revenue growth of 8 percent YoY much below that of Havells.

It feels the competitive pressures in lighting segment will limit revenue growth. Hence, it has maintained sell call on the stock and slashed target price to Rs 190 from Rs 215 earlier.

At 13:27 hours IST, the stock was quoting at Rs 199.90, up Rs 2.80, or 1.42 percent on the BSE.
First Published on Oct 29, 2018 02:17 pm
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