Sharekhan recommended hold rating on Greaves Cotton with a target price of Rs 150 in its research report dated November 05, 2019.
Sharekhan's research report on Greaves Cotton
GCL’s revenue growth to moderate substantially in FY20 to flat growth attributable to sustained weakness in automotive demand and slowdown in the aftermarket and agri business. Margin pressures to sustain given the negative operating leverage and increased losses in the electric two wheeler business. OPM’s to dip 100 bps to 12.5% in FY20. Earnings to fall 11% in FY20; Have cut FY20 and FY21 earnings estimates cut by 2-3%. Valuations at 19x FY21 earnings are close to historical average of 17-18x.
We retain our Hold rating on Greaves Cotton Ltd (GCL) with an unchanged PT of Rs 150.Q2 results missed estimates due to margin miss on account of adverse mix and higher RM costs.
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