1. Crompton Greaves shares gain as consolidated Q1 net loss narrows; should you buy?

Crompton Greaves shares gain as consolidated Q1 net loss narrows; should you buy?

Crompton Greaves shares gained on Wednesday after the company’s consolidated net loss narrowed to Rs 9.51 crore for the quarter ended June 30, 2016 against net loss of Rs 62.20 crore in the corresponding quarter a year ago.

By: | Published: August 31, 2016 4:59 PM
Crompton Greaves shares gain as consolidated Q1 net loss narrows; should you buy? Crompton Greaves shares gained on Wednesday after the company’s consolidated net loss narrowed to Rs 9.51 crore for the quarter ended June 30, 2016 against net loss of Rs 62.20 crore in the corresponding quarter a year ago.

Crompton Greaves shares gained on Wednesday after the company’s consolidated net loss narrowed to Rs 9.51 crore for the quarter ended June 30, 2016 against net loss of Rs 62.20 crore in the corresponding quarter a year ago. Consolidated net total income from operations of Crompton Greaves jumped to Rs 1423.76 crore for the quarter under review against Rs 1027.52 crore in the same quarter last fiscal.

Shares of Crompton Greaves closed 1.65 per cent up at Rs 83.30. The scrip opened the day at Rs 83.50 and touched a high and low of Rs 85.45 and Rs 82.50, respectively, in trade. Benchmark BSE Sensex settled 109.16 points up at 28,452.17.

On a standalone basis, the company reported 48.37 per cent fall in bottomline figures at Rs 38.27 crore for the quarter ended June 30, 2016 against net profit of Rs 74.12 crore in the same quarter last fiscal.

According to analysts, Crompton Greaves results were in line with estimates. Religare Institutional Reserach said while maintaining a ‘Buy’ rating with target price of Rs 100 for September 2017 said, “With an improvement in balance sheet and cash flows, we find current valuations of Crompton Greaves (at PE of 18x-FY18E) attractive.”

It further added, “Crompton Greaves’s first quarter results were in line with estimates as subsidiary business posted higher margins. However, subsidiary business performance is unsustainable as it included trading gains in the power segment. CRG’s continuing business is likely to strengthen as expenses related to the discontinued business taper off. Thus, we think the earnings trajectory for FY18E can surprise on the upside.”

Remaining positive on the company’s stocks, Prabhudas Lilladher said that Crompton Greaves is in the midst of restructuring over the past few years. Successful sale of international business will give the management the bandwidth to focus on domestic business. Domestic business has potential to grow, both on power and industrial side, over the next few years. While maintain ‘Accumulate’ rating on the stocks with target price of Rs 92, the brokerage house said,” The stock is a good proxy to play on recovery in domestic T&D and industrial capex. The stock can re‐rate if the management is able to deliver consistent performance over the next few quarters.

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