Moneycontrol Bureau
Investors offloaded lot of equity shares of Crompton Greaves Wednesday following losses, provision for impairment of value of subsidiaries and slump in order inflow during December quarter. Even immediate step down of MD and CEO impacted the stock that crashed 28.5 percent intraday.
The Avantha Group company posted a consolidated loss of Rs 107 crore in Q3 due to lower revenue and weak operational performance. Profit stood at Rs 274.3 crore in year-ago period and Rs 52.14 crore in preceding quarter.
Revenue during the quarter declined 14 percent to Rs 2,067.8 crore compared to Rs 2,409.3 crore year-on-year, hit by power systems business that reported 19 percent decline in revenue and EBIT loss of Rs 38.4 crore (against earnings before interest & tax of Rs 29.5 crore Y-o-Y).
Crompton has an exceptional gain of Rs 30.08 crore in Q3, wherein provision of Rs 410 crore for loan given to subsidiaries (including loss on sale of Canadian operation) nearly offset profit Rs 426.15 crore on sale of land at Kanjurmarg, Mumbai and sale of investment (of Rs 13.93 crore) in CG Lucy Switchgear.
Operating profit dropped 85.5 percent to Rs 9 crore and operating profit margin contracted significantly to 0.4 percent from 2.6 percent in same period.
The company has not reported numbers from its consumer business, which hived off recently. Even it has not disclosed any timeline for listing of this business.
Its consolidated order inflow slipped 12 percent YoY to Rs 2,104 crore and orderbook was lower by 7 percent YoY to Rs 7,954 crore at the end of December 2015.
Meanwhile, its board members rejected offer to sell international power business. Crompton said board of directors received a definitive offer for purchase of selected power businesses in Europe, USA and Indonesia but after due discussion and deliberation, it decided not to accept offer in current form.
Laurent Demortier stepped down as CEO and managing director of Crompton Greaves with effect from February 3. From the same date, K N Neelkant took over as CEO and MD of the company, it said.
On standalone basis, profit plunged 72.9 percent year-on-year to Rs 107.3 crore and revenue declined 4.5 percent to Rs 990.9 crore in Q3.
With maintaining outperform rating on the stock, Bank of America Merrill Lynch slashed target price to Rs 159 from Rs 167 earlier and also cut FY16-18 earnings per share by 17-19 percent.
The brokerage said it attributed negative enterprise value of Rs 14 per share for international power business and potential upside on sale of international business would not be significant.
Religare maintained buy rating on the stock, but cut target price to Rs 165 from Rs 200.
At 10:51 hours IST, the scrip of Crompton Greaves was quoting at Rs 127.90, down Rs 39.20, or 23.46 percent amid high volumes on the BSE.
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