Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Crompton Greaves Limited
Overweight
CROM.BO, CRG IN
Margin disappoints in Mar-q
• Sales ahead of estimates but margin disappoints: CG reported sales of
Rs29.1bn (up 16% YoY), 6.9% ahead of estimates. Contrary to our
expectation of stable margins, OPM dipped ~320bps to 12.8%, leading to
EBITDA de-growth of ~7.3% YoY in March-q. Margin pressure was led by
higher RM and other expenses as a percentage of sales. Owing to a low tax
rate (19.3% vs. 29.5% in 4QFY10), Mar-q adj. PAT of Rs2.9bn (up 6.7%
YoY) was just a tad below our estimate (Rs2.94bn).
• Overseas subsidiary growth surprises positively, domestic power
segment registers slight revenue de-growth in Mar-q: Overseas
subsidiaries grew 28.5% in INR terms. Even after factoring in favorable
currency movements, growth in euro terms appears to be in excess of 20%,
well ahead of expectation of high single digit growth. This also cushioned
impact of revenue de-growth of 1.1% in domestic power segment. Industry
segment reported strong 25% top-line growth and consumer segment
~20%.
• Industry segment margins declined to 14.9% in Mar-q vs. 25.6% in
4QFY10: Traditionally industry segment margins are the highest among
CG's business segments. We suspect a one-off expense in domestic industry
sales may have caused the sharp dip. We infer that margins on industrial
sales in overseas subs (~Rs330mn) were just 2%.
• Summing up FY11 performance: Consol sales grew ~9.5% YoY, dragged
down by weak growth in domestic power segment (~1.8%). Though CG has
managed to improve margins thru 9MFY11 by ~50%, weak 4Q dragged
down FY11 margins to 13.4% (down 60bps). Though growth at PBT level
was just 3.4%, a low tax rate of 25% (vs. 31% in FY10), led to PAT growth
of 12.4% YoY.
• Conference call at 9:30AM IST today (Dial in: +91-22-30650111): We
expect details on: (a) Outlook on growth and margins in FY12, (b)
Explanation for margin dip and low tax-rate in 4Q, (c) Succession planning
as Mr. S.M. Trehan (MD), who steps down in May-11, (d) order inflows in
4Q and outlook for FY12. We remain cautious on potential EPS cuts post
weak 4Q
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Crompton Greaves Limited
Overweight
CROM.BO, CRG IN
Margin disappoints in Mar-q
• Sales ahead of estimates but margin disappoints: CG reported sales of
Rs29.1bn (up 16% YoY), 6.9% ahead of estimates. Contrary to our
expectation of stable margins, OPM dipped ~320bps to 12.8%, leading to
EBITDA de-growth of ~7.3% YoY in March-q. Margin pressure was led by
higher RM and other expenses as a percentage of sales. Owing to a low tax
rate (19.3% vs. 29.5% in 4QFY10), Mar-q adj. PAT of Rs2.9bn (up 6.7%
YoY) was just a tad below our estimate (Rs2.94bn).
• Overseas subsidiary growth surprises positively, domestic power
segment registers slight revenue de-growth in Mar-q: Overseas
subsidiaries grew 28.5% in INR terms. Even after factoring in favorable
currency movements, growth in euro terms appears to be in excess of 20%,
well ahead of expectation of high single digit growth. This also cushioned
impact of revenue de-growth of 1.1% in domestic power segment. Industry
segment reported strong 25% top-line growth and consumer segment
~20%.
• Industry segment margins declined to 14.9% in Mar-q vs. 25.6% in
4QFY10: Traditionally industry segment margins are the highest among
CG's business segments. We suspect a one-off expense in domestic industry
sales may have caused the sharp dip. We infer that margins on industrial
sales in overseas subs (~Rs330mn) were just 2%.
• Summing up FY11 performance: Consol sales grew ~9.5% YoY, dragged
down by weak growth in domestic power segment (~1.8%). Though CG has
managed to improve margins thru 9MFY11 by ~50%, weak 4Q dragged
down FY11 margins to 13.4% (down 60bps). Though growth at PBT level
was just 3.4%, a low tax rate of 25% (vs. 31% in FY10), led to PAT growth
of 12.4% YoY.
• Conference call at 9:30AM IST today (Dial in: +91-22-30650111): We
expect details on: (a) Outlook on growth and margins in FY12, (b)
Explanation for margin dip and low tax-rate in 4Q, (c) Succession planning
as Mr. S.M. Trehan (MD), who steps down in May-11, (d) order inflows in
4Q and outlook for FY12. We remain cautious on potential EPS cuts post
weak 4Q
No comments:
Post a Comment