Motilal Oswal's research report on Crompton Greaves
Crompton Greaves’ (CRG) 2QFY17 consolidated revenues grew 4.6% YoY to INR 14.9b (above our estimate), led by strong industrial system performance (+11% YoY). EBIDTA of INR0.8b was below our estimate of INR 1.0b. EBIDTA margin of 5.6% too missed our estimate of 7.3% due to higher-thanexpected other expenses. Adj. PAT of INR268m was below our estimate of INR 293m.
ValuationWe cut our estimates for FY17/FY18 by 82/62% to factor in annual overseas T&D business loss of INR 1.6b. We would revisit our numbers on getting more clarity on sale/closure of these businesses. We downgrade our rating to Sell with TP of INR 50 (15x FY19E EPS, in line with five-year average). Key upside risks are: a) better-than expected overseas T&D business performance and b) much lower competition in domestic T&D.
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