Prefer Crompton Greaves: SP Tulsian

SP Tulsian of sptulsian.com told CNBC-TV18, "Crompton Greaves gives an interesting turn, because maybe after these numbers, management have realised their mistake of going overboard or not including the Crompton Greaves consumer electrical. They have started giving the explanation that why they have not been able to sell the overseas business of their power system business. Now, the meeting of the Crompton Greaves Consumer Electricals is convened on November 9, to consider Q3 numbers which has been hived off. Actually that was wrong on part of the company.""The company has a topline of closer to about Rs 3,500 crore on an annualised basis having an EBIT of about close to Rs 400 crore and we all know that the Indian operations or Indian unit does not have any debt. It is a debt free company. So, that Rs 400 crore EBIT virtually becomes as a Rs 400 crore PBT. If you take the 20-22 percent income tax liability of the company and if that standalone company even will have the tax liability of 25 percent ballpark, it will be having a PAT of Rs 300 crore. That means, it will be having an EPS of closer to Rs 5," he added. "It can give a valuation of about Rs 90. That is what the market is all being talked, if the talks are all been going on in the market that 18 PE multiple on a topline of Rs 4,000 crore, people will start comparing that with Bajaj Electricals and Havells India and maybe a valuation of Rs 90-95 for that. So, the residual value of Crompton Greaves, you get is about Rs 40. So, at those valuations, people are expecting that probably the stock has gone underowned, now it is oversold," he said."I do not think that consumer electrical division will really be giving any kind of shock. One can expect a topline of closer to about Rs 800 crore, EBIT of about Rs 70 crore in the worse case scenario, that is my estimate. So, that stock can be kept on radar, not for the day, but at least till November 9 or maybe for remaining part of the series where you can see the good technical bounce and as well as a fundamental rerating."