Arihant Capital's research report on Greaves Cotton
Greaves Cotton Limited (GCL) has reported Mixed performance during Q3 FY22 with PAT de-growth, margin, and revenue above estimate. Net profit for the quarter de-grew by 70.8%/+0.6%of INR 83.9 mn in Q3FY22 against our estimate of INR 58 mn. Standalone revenue from operations de-grew by 31.2%YoY/+5.8%QoQ stood at INR 3,005 mn in Q3FY22 against our estimate of INR 3,125 mn led by growth in the Engine, mobility, and other segments. Gross margin of the company decreased by 18bps QoQ at 28.8%. Despite the decrease of the gross margin, the company's EBITDA margin expanded by 415bps QoQ to 5.7% Q3FY22 against our estimate of 3.2%. EPS at INR 0.36 in Q3FY22 against INR 0.36 in Q2FY22 and INR 1.2 in Q3FY21. Q3FY22 has seen a positive recovery with a host of activities; like the launch of our flagship model Magnus EX, the inauguration of EV mega factory in Ranipet, the launch of Ampere Experience Centre, and increasing demand for products across multiple segments boosted by an increase in network.
We have valued the standalone business to 11x its EBITDA of INR INR 1642 and Ampere’s business at FY24E P/sales at 3x, yielding INR 91 per share. Our SOTP valuation yields a fair value of INR 185 per share. We maintain our Accumulate rating on the stock.
At 15:40 hrs Greaves Cotton was quoting at Rs 171.00, up Rs 10.90, or 6.81 percent.
It has touched an intraday high of Rs 172.95 and an intraday low of Rs 166.45.
It was trading with volumes of 253,146 shares, compared to its thirty day average of 302,409 shares, a decrease of -16.29 percent.
In the previous trading session, the share closed down 8.17 percent or Rs 14.25 at Rs 160.10.
The share touched its 52-week high Rs 258.85 and 52-week low Rs 116.90 on 21 January, 2022 and 19 March, 2021, respectively.
Currently, it is trading 33.94 percent below its 52-week high and 46.28 percent above its 52-week low.
Market capitalisation stands at Rs 3,959.01 crore.
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