Greaves Cotton - Delivers despite odds; Reiterate BUY :Emkay

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Greaves Cotton

Delivers despite odds; Reiterate BUY

BUY

CMP: Rs88                                        Target Price: Rs124

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n     Q1FY12 performance meets expectations (1) Revenue growth at 16% yoy to Rs4.0 bn (2) EBITDA margins up 110 bps yoy to 14.2% (3) APAT up 26% yoy to Rs350 mn

n     Continued traction in both division (1) Engines – Revenues up 14% yoy with EBIT margins at 17.6% (2) Infrastructure – Revenues up 29% yoy with EBIT of Rs2 mn

n     Reiterate that GCL is in a sweet-spot with strong growth drivers in Engines (automotive) and Infrastructure segment (turned profitable)

n     Trading attractively at 9.3X FY13E earnings with healthy cash flow generation, +30% ROE. Retain BUY rating  with price target of Rs124