CMP - ₹230

Dalal Street Investment Journal - - RECOMMENDATIONS -

Acom­pany well-known for its elec­tric fans and res­i­den­tial pumps with lead­ing po­si­tion in light­ing is also pen­e­trat­ing fast into house­hold ap­pli­ances and agri­cul­tural pumps busi­nesses. Cur­rently, the com­pany de­rives 28% from light­ing and 72% from elec­tri­cal con­sumer durables. Dur­ing FY18, the com­pany has di­vested its US power busi­ness in July 2018 and is ex­pected to sell its power sys­tems busi­ness in Hun­gary by the end of Novem­ber 2018. Go­ing for­ward, it is ex­pected to fo­cus on rail­way busi­ness, ser­vices busi­ness and in­tel­li­gent prod­uct port­fo­lio. Fi­nan­cially, it has posted ro­bust topline and bot­tom­line growth of 119% and 176%, re­spec­tively, in FY17. Though the com­pany’s D/E stands at 1.2, it holds favourable in­ter­est cov­er­age of 7.9. The com­pany has been fo­cus­ing on pre­mi­u­mi­sa­tion due to which the share of rev­enue from pre­mium fans has in­creased to 18% from 16% in FY17. Thereby, with pre­mi­u­mi­sa­tion re­tain­ing cost ef­fi­cien­cies, we rec­om­mend a BUY in the scrip for a tar­get of ₹264 and stop loss of ₹212.

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