Kotak Securities is bearish on Elgi Equipments and has recommended sell rating on the stock with a target of Rs 98 in its November 3, 2014 research report.
Kotak Securities research report on Elgi Equipments
“Elgi Equipments, EEL reported Q2FY15 in line with our estimates on operating margin front. Domestic business reported muted revenue growth on account of sluggish business environment and continuing slowdown in water-well segment. Situation in overseas geographies reported recovery in the quarter. International subsidiaries (ex-China) have reported operating profit in the quarter and in 1HFY15.”
“Management has refrained from commenting on Patton's USA as ELGI has reached an out of court settlement with Quincy/Atlas Copco. Management has given strong outlook for American business. We look for further clarity on Patton's operations and note that Patton's remains one of the company's key acquisitions so far and any negative development on this front could be of severe risk to EEL. We tweak FY15 and FY16 estimates to factor in 1) marginal recovery in domestic market and 2) higher contribution (revenue and profitability) from the international subsidiaries. In view of downside to our DCF based revised target price of Rs 98 (Rs 93 earlier), we maintain 'SELL' recommendation on company's stock,” says Kotak Securities research report.
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