Gautam Thapar, Chairman, Crompton Greaves Ltd.
Crompton Greaves shed 0.52% to Rs 212.35 at 11:24 IST on BSE, with the stock reversing direction after hitting 52-week high in highly volatile trade. Meanwhile, the BSE Sensex was up 77.90 points, or 0.3%, to 25,661.59 On BSE, so far 3.85 lakh shares were traded in the counter, compared with an average volume of 5.66 lakh shares in the past one quarter. The stock saw high intraday volatility. The stock rose as much as 2.71% to hit a 52-week high of Rs 219.25 in intraday trade today, 11 June 2014. The stock fell as much as 1.14% at the day’s low of Rs 211 so far during the day. The stock hit a 52-week low of Rs 71.70 on 25 June 2013. The stock had outperformed the market over the past one month till 10 June 2014, surging 22.5% compared with the Sensex’s 11.26% rise. The scrip had also outperformed the market in past one quarter, jumping 39.88% as against Sensex’s 16.64% rise. The large-cap company has an equity capital of Rs 125.82 crore. Face value per share is Rs 2. Crompton Greaves after market hours on Tuesday, 10 June 2014 said that the company’s Automation Business Unit has been awarded a significant contract for supply of 750,000 smart meters from the Spanish utility Gas Natural Fenosa (GNF) and will be one of its main smart meter suppliers for the next two years. ZIV single phase smart meters will cover a large part of the demand for domestic meters from GNF. Crompton Greaves Automation will also be supplying nearly 20,000 three-phase meters and is now participating in a significant tender for DCUs (Data Concentrator Units). ZIV’s 4CTT model is nowadays the reference DCU in the market after becoming the first model certified by the PRIME alliance last year and having proven a robust performance onsite. Crompton Greaves, after acquiring ZIV, is the key provider of smart meters and an important player in the global smart grid market where it offers ZIV meters, data concentrator units (DCU) and distribution automation solutions ( DAS). After significant wins in Latin America and Europe CG is strongly pursuing a growth in the market by positioning ZIVs smart grid solutions in several pilots worldwide. ZIV smart grid solutions have already gone beyond AMI. CG has broadened the coverage of its smart grid portfolio with an ambitious catalogue of Distribution Automation Solutions that range from LV supervision to MV automation, including Overhead MV Line Automation, Compact Secondary Substations and Microgrid Management. New distribution automation solutions, combined with the variety of communication technologies available nowadays will help grid operators to improve their operational processes, while suppliers, energy service companies and customers will also benefit from the availability of data and the possibility to manage aggregated load profiles, Crompton Greaves said. Speaking about this contract GNF’s representatives have commented that ZIV meters have proven to be robust and competitive over the past years. ZIV has played a key role in
knowledge together with a clear customer service and satisfaction policy has helped GNF to meet its objectives in the past. We trust ZIV will continue to support us during the ambitious deployment we will be pursuing in the coming years. Speaking about this win, Avantha Group Company CG’s CEO and Managing Director, Laurent Demortier said: As a global AMI provider, this win is very significant; we sincerely thank GNF. We are proud to be the main PRIME meter provider. In the coming years, legislative and regulatory incentives will be the key to promote Smart Grid Investments. CG will benefit from the smart grid market driving forces and foresees a very promising growing opportunity for the Automation BU. On a consolidated basis, Crompton Greaves’ net profit jumped 152.6% to Rs 63.82 crore on 11.2% rise in net sales to Rs 3766.48 crore in Q4 March 2014 over Q4 March 2013. Crompton Greaves is a global generation, industries, and consumers. The company is organized into three business groups: power, industrial and consumer.
Buy Crompton Greaves; target of Rs 224: PLilladher
Prabhudas Lilladher is bullish on Crompton Greaves and has recommended buy rating on the stock with a target of Rs 224 in its June 10, 2014 research report. “CRG’s management indicated that incremental orders in Q3FY14, especially in Power, are 600bps higher than the margins in the current backlog. The company remains selective in picking up system orders and is looking for orders with at least 50 percent product pull. Outlook for domestic and export ordering continued to be positive. The management indicated that expanded capacity in Hungary ( 7500MVA -12,500MVA) is taking time to stabilise and transfer of projects from Belgium are still to be executed and it will take few more quarters for the plant to stabilise. The losses in Canada has been sustained at runrate of USD2.5m/quarter, however company has restructured operations in Canada and expect performance to improve in FY15. . Management expect overseas subsidiaries to report double digit revenue growth in FY15. Management focus is to stabilise various plants (Hungary, Canada, Saudi) to improve profitability. CRG also highlighted the possibility of a large smart-meter ordering opportunity from France & Poland whose potential order size could be ~US$1-1.3bn over the next three years.” “In the consumer business, focus is to increase reach and improve offering of premium products (especially Fans). The company has added ~1100 new
retailers over the last nine months in the Lighting & Fans segment. The company expects to take up the reach to 70 percent as against the current reach in lighting which is at ~17 percent and fans which is at ~40 percent. Company’s s t rong product portfolio has improved its geographical reach and a better manufacturing footprint should help CRG deliver strong growth once the cycle turns. Among the power ancillaries, CRG is ideally placed to benefit from an improved economic growth. We expect decisive government to be formed at the centre , which should result in a stronger economic growth being reflected in the second half of FY15. This in our views will result in better outlook for CRG, and we continue to arte the stock a BUY with a TP of 224.Though the stock price has outperformed we maintain our ‘BUY’ on declines on the stock,” says Prabhudas Lilladher research report.
Crompton Greaves puts land parcel up for sale
Will sell 32 acres in tranches, total valuation Rs 1,400 crore Crompton Greaves has put up a part of its land parcel at LBS Marg in the eastern suburbs of this city for sale. Property consultants say the deal is likely to be announced in 7-10 days. “The company has put 8-10 acres up for sale now; the rest will be sold in
tranches,” said a property consultant. The total valuation of the 32-34-acre plot is estimated at Rs 1,400 crore. In an emailed response to a query, the company said: “The company, in ordinary course, monitors its business activities by duly conducting a generic assessment of its asset utilisation and potential for optimisation. As a company policy, we do not respond to market rumours and speculation.”
Sources said most leading
builders were in the race to buy the land parcel, adding Lodha, Runwal and Oberoi Realty were the frontrunners. “This property in LBS Marg, Kanjurmarg, has an excellent view. While there is a factory on the adjacent area now, it is expected the factory will be shifted gradually; the rest of the land will also be sold,” said a property consultant. Analysts said at an analyst meeting, the Crompton Greaves management had mentioned the company, from a long-term perspective, planned to move its power transformer factory from Mumbai to Gujarat. Property consultants say at Rs 35 crore an acre, the valuations on offer are at par with those of previous deals in the same area. “The valuation seems quite fair. A couple of years ago, Indian Smelting had sold a land parcel there, at about Rs 30 crore an acre,” said a property consultant. For the March quarter, Crompton Greaves’ profit rose 2.5 times to Rs 63.82 crore from Rs 25.27 crore in the corresponding period last year,
owing to an improvement in the power systems business and a rise in other income. The power systems business reported 17.3 per cent growth in revenue and a profit of Rs 112 crore, against a loss of Rs 58 crore in the march quarter of FY13. During the same period, the company’s other income jumped from Rs 5 crore to Rs 84 crore. However, the company’s international operations continue to lose money. While the power business contributes 60 per cent to the company’s revenue, the consumer products segment accounts for 20 per cent and industrial systems 15 per cent. The Crompton Greaves management is expects a break-even at the operating level this quarter. On Tuesday, the Crompton Greaves stock closed at Rs 198.15 on BSE, down 2.53 per cent.
Buy Crompton Greaves, L&T: Ajay Bodke
Ajay Bodke, Head - Investment Strategy & Advisory at Prabhudas Lilladher prefers buying Crompton Greaves in the midcap space and Larsen and Toubro from the largecap space. Ajay Bodke, Head - Investment Strategy & Advisory at Prabhudas Lilladher told CNBC-TV18, “If a solution has come in in terms of the deferral of the premium payment it
spells very good news and a large impediment in case of some of these road sector companies will be overcoming.” He further added, “In case of infrastructure companies, Larsen and Toubro (L&T) in the large cap space, Crompton Greaves in the midcap space are our preferred buys. In addition to that, we have to wait and see what kind of policies in various subsectors like railways get announced.” “In railways Texmaco Rail and Engineering is a company which looks very good. In capital goods, in case of public sector banks I think the valuations have clearly run-up very sharply. One will have to trade cautiously in case of capital goods because the revival of some of the long pending projects is a key deliverable that the government now has to do for the valuations to continue,” Bodke said.
Expect Crompton Greaves to touch Rs 192: SP Tulsian
According to SP Tulsian of sptulsian. com, Crompton Greaves may hit Rs 192 level in next couple of weeks. SP Tulsian of sptulsian.com told CNBC-TV18, “Results in Crompton Greaves may be lower-than-expected. Standalone numbers were never the problem for Crompton Greaves. If someone wants to take the call for last three-four years, one will never have any complaint on the standalone numbers. Consolidated power system EBIT is at Rs 113 crore. On the consumer product division which is always very flat, EBIT was Rs 91 crore against Rs 76 crore in Q3.” He further added, “The stock is now moving on stake sell news but I don’t think that management will be hasty when the cycle is on an upturn. Even if we see an improvement of about 30 percent in the EBITDA over a year on their core business, don’t expect anything on their other two segments. But if one sees the 30 percent increase in their EBIT which is possible for FY15, that will be the remarkable performance. But the best part is BHEL and Crompton Greaves have been correcting in this last three days and yesterday also when the expiry has happened at a lower level, there was no margin of safety.” “I think the stock looks very good, I will not be surprised to see he stock moving to Rs 200 in the June series but look for a level of Rs 192 as a technical trader with a view of about couple of weeks,” Tulsian said.