ICICI Direct's research report on Greaves Cotton
Greaves Cotton's (GCL) revenues came in at Rs 506.5 crore, up 13.2% YoY, above our estimate of Rs 492.1 crore. Engine segment revenues grew 10.3% to Rs 472.2 crore while other segment grew 80.2% to Rs 34.2 crore EBITDA came in at Rs 70.6 crore, up 13.4% YoY (nearly in line with our estimate: Rs 70.8 crore). EBITDA margins were at 13.9%, staying flat YoY but below our estimate of 14.4%. The key reason for the variance was more-than-expected increase in raw material expenses PAT came in at Rs 42.7 crore, down 23.2% YoY and below our estimate of Rs 51.0 crore. The company reported Rs 5 crore exceptional item towards provision for fixed deposits with IL&FS, which impacted PAT for the quarter. The effective tax rate increased 80 bps to 31.7% for the quarter.
Outlook
We build in 10.6% revenue CAGR in FY18-20E. We believe Ampere will help GCL cater to the underserved bottom of the pyramid market. We revise price multiple (considering subdued auto volumes) and value the company at 16x FY20E to Rs 140/share. We maintain BUY rating.
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Read More First Published on Feb 27, 2019 03:39 pm
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