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Margins disappoint
�� Consol. sales inline; margins disappoint on higher RM costs
�� Decent revival seen in overseas entities; margins down 530bps
�� Dom. power sales down 1%,consumer up 19%,industrial up 25%
�� Maintains consolidated power systems margins at 12.4% in F11
Sales inline; margins compress
CRG’s consolidated sales came in at
INR29.0b (up 16% y-y, up 21.3% q-q)
driven by strong growth from overseas
entities (up 31.7% y-y in Euro terms),
consumer (up 19.6% y-y), and industrial
segments (up 25%y-y) which offset the
decline in domestic power segment (down
1.1% y/y). Consol. PAT came in at
INR2.89 (up 7%) due to a 320bps
contraction in EBITDA margins due to
higher raw material costs (up 230bps y/y)
& other expenses (up 200bps y/y).
Strong revival overseas
Overseas entities reported a strong
revival in growth with sales of Euro184.5mn (up 31.5% y/y) on revival
in short cycle industry and construction orders. This improved
performance ties in with the strong order revival seen by ABB India’s
parent [ABBN VX] which reported an 18% y/y growth in European
orders and 20% y/y in US orders. This reinforces confidence in our
13.7% y/y growth estimate for FY12. Driven by high copper prices,
EBITDA margins in the overseas business compressed 530bps.
Industrial margins could mean revert to 17-18%
Standalone EBIT Margins came in at 15.7% (down 240bps y/y) due
to 140bps compression in domestic power and 720bps y/y
compression in industrial segment. It is important to note that mgmt.
maintained consolidated power systems margins at 12.4% on a full
year FY11 basis despite intense price competition and high
commodity costs. Given strong competition FY12 industrial segment
margins could mean revert to 17-18% levels versus 22% in FY10.
What to look for in the conference call?
We would look for management commentary on a) timelines for a revival
in domestic T&D, b) growth guidance for its overseas business given a
decent revival seen for its larger peers, c) competitive intensity in its
industrial and domestic power business e) margin outlook for both
standalone and international subsidiaries f) order intake during the
quarter and outlook for new orders in FY12.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Margins disappoint
�� Consol. sales inline; margins disappoint on higher RM costs
�� Decent revival seen in overseas entities; margins down 530bps
�� Dom. power sales down 1%,consumer up 19%,industrial up 25%
�� Maintains consolidated power systems margins at 12.4% in F11
Sales inline; margins compress
CRG’s consolidated sales came in at
INR29.0b (up 16% y-y, up 21.3% q-q)
driven by strong growth from overseas
entities (up 31.7% y-y in Euro terms),
consumer (up 19.6% y-y), and industrial
segments (up 25%y-y) which offset the
decline in domestic power segment (down
1.1% y/y). Consol. PAT came in at
INR2.89 (up 7%) due to a 320bps
contraction in EBITDA margins due to
higher raw material costs (up 230bps y/y)
& other expenses (up 200bps y/y).
Strong revival overseas
Overseas entities reported a strong
revival in growth with sales of Euro184.5mn (up 31.5% y/y) on revival
in short cycle industry and construction orders. This improved
performance ties in with the strong order revival seen by ABB India’s
parent [ABBN VX] which reported an 18% y/y growth in European
orders and 20% y/y in US orders. This reinforces confidence in our
13.7% y/y growth estimate for FY12. Driven by high copper prices,
EBITDA margins in the overseas business compressed 530bps.
Industrial margins could mean revert to 17-18%
Standalone EBIT Margins came in at 15.7% (down 240bps y/y) due
to 140bps compression in domestic power and 720bps y/y
compression in industrial segment. It is important to note that mgmt.
maintained consolidated power systems margins at 12.4% on a full
year FY11 basis despite intense price competition and high
commodity costs. Given strong competition FY12 industrial segment
margins could mean revert to 17-18% levels versus 22% in FY10.
What to look for in the conference call?
We would look for management commentary on a) timelines for a revival
in domestic T&D, b) growth guidance for its overseas business given a
decent revival seen for its larger peers, c) competitive intensity in its
industrial and domestic power business e) margin outlook for both
standalone and international subsidiaries f) order intake during the
quarter and outlook for new orders in FY12.
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