Crompton Greaves (CG) :: Angel Broking Diwali Top Picks (Diwali Muharat)

Please Share::

�� India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details ��

��

-->
 Crompton Greaves (CG) is among the leading players in the power transmission &
distribution, industrial equipment, and consumer products and solutions segments
in India. The company derives more than 50% of its revenue from international
operations (as of FY2014).
 The company has proposed to de-merge its consumer business into a separate
listed entity. In the consumer business, CG is a market leader in the fans and
pumps segments with 26% and 14% market shares, respectively. We believe the
demerger would unlock value for share holders as the consumer business is expected
to deliver strong growth in the near future with higher margins and better return
ratios. Thus, CG's consumer business would command a higher valuation multiple,
in line with its peers in the space.
 The overseas operations as in Belgium, Hungary, Canada and US have become
profitable at the EBITDA level but are still showing losses at the net profit level
owing to higher interest liabilities. CG's Management expects margins to improve
as the new orders bagged are relatively higher margin orders.
 The stock trades at an attractive valuation of 0.9x FY2016E EV/sales; we maintain
our positive stance on the company and assign an EV/sales multiple of 1x to
arrive at a target price of arrive at a target price of ```235, implying an upside of 16% in the stock price from 235, implying an upside of 16% in the stock price from
the current levels. the current levels.