ICICI Direct's research report on Crompton Greaves Consumer
CGCEL acquired a majority stake in Butterfly Gandhimathi Appliance (Butterfly) for a consideration of ~Rs 2077 crore. The transaction includes 55% stake and trademark license from Butterfly’s promoters at Rs 1410 crore (implied market cap of Rs 2564 crore for Butterfly). CGCEL will also launch open offer for acquiring 26% stake from public for a consideration of ~Rs 667 crore (~ Rs 1434/share). CGCEL will finance this acquisition through mix of debt and internal accruals (CGCEL had net cash of Rs 1083 crore as on December 2021). With the offer price, Butterfly is valued at 2.9x FY21 sales and 71x FY21 earnings.
We revise our rating from BUY to HOLD With our SoTP based valuation, we arrive at a target price of Rs 465/share ascribing CGCEL’s standalone business 37x FY24E EPS and 2x FY24E sales to Butterfly.
At 16:01 hrs Crompton Greaves Consumer Electrical was quoting at Rs 405.60, down Rs 2.80, or 0.69 percent.
It has touched an intraday high of Rs 418.85 and an intraday low of Rs 394.30.
It was trading with volumes of 200,776 shares, compared to its thirty day average of 49,910 shares, an increase of 302.28 percent.
In the previous trading session, the share closed up 7.87 percent or Rs 29.80 at Rs 408.40.
The share touched its 52-week high Rs 512.05 and 52-week low Rs 350.35 on 16 September, 2021 and 23 April, 2021, respectively.
Currently, it is trading 20.79 percent below its 52-week high and 15.77 percent above its 52-week low.
Market capitalisation stands at Rs 25,475.71 crore.
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