Buy Crompton Greaves; target of Rs 235: Angel Broking

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26 Aug, 2025 12:21

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Angel Broking`s research report on Crompton Greaves 

“For 2QFY2015, Crompton Greaves (CG)’s top-line performance was below our estimates, growing by 7% yoy to Rs3,430cr. On the EBITDA front, the company's margin decline by 10bp yoy to 4.9%, which is lower than our estimate of 5.3%, due to lower-than-expected recovery in margins of international operations. Consequently, the profit improved by 19% yoy to Rs70cr, but was lower by 16% than our estimate of Rs83cr.” “CG reported a modest growth of 8.9% yoy in domestic operations to Rs1,923cr. The growth was lead by the consumer segment, which grew by 13% yoy. Revenue from the industrial segment grew by 6.9% yoy and that from the power segment grew by 6.4% yoy. However, the EBITDA margin on a standalone basis declined by 30bp yoy to 8.7%. CG board has approved the demerger of its consumer business into a wholly owned subsidiary Crompton Consumer Products Ltd. CG will retain a 25% stake in the demerged business and share holders will get 3 shares in Crompton Consumer Products Ltd for every 4 held in CG.” “We are of the opinion that CG’s margins has room for improvement and expect the operating margin to gradually improve over the next year as international business recovers. Given the attractive valuation (stock trading at 0.9x FY2015E EV/Sales compared to its five year trading range of 0.5x to 1.5x), we maintain our Buy recommendation on the stock. We have assigned a multiple of 1x EV/Sales to arrive at a target price of Rs235,” says Angel Broking research report.  

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