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CRG's 2QFY12 consolidated PAT at Rs1.16bn (down 45% yoy) was lower than our expectation
of Rs1.42bn. Segmental analysis reveals weak growth and margins across the board. The
balance sheet too has deteriorated on macro and micro headwinds. We will review our earnings
and TP post tomorrow's investor meet.
Disappointing 2QFY12 results; margin disappoints again
Crompton’s (CRG) 2QFY12 consolidated revenue of Rs27bn (up 12.8% yoy) was higher than our
estimate of Rs25.7bn led by better-than-expected revenue at overseas subsidiaries of Rs12.5bn
(up 32% yoy). However, EBITDA margin at 8.4% (down 550bp yoy) came below our expectation
of 10%, largely led by a lower-than-expected improvement in overseas margins. Accordingly,
PAT came in at Rs1.16bn (down 45% yoy), lower than our expectation of Rs1.42bn.
Segmental analysis reveals weak growth and margins
Standalone revenue growth was flat yoy at Rs14.5bn; the power segment saw de-growth of 7%
yoy to Rs6bn, the consumer segment saw tepid growth at 3.6% yoy to Rs4.8bn (slowdown
continued from 1Q) and industrial growth slowed to 9.4% yoy to Rs3.8bn from high double-digit
growth seen in the last six quarters. Standalone EBIT margins declined across segments by 300-
600bp (see Table 2). Overseas subsidiaries’ revenue was up 32% yoy to Rs14.5bn, led by
currency gains (7.7%) and inclusion of recent acquisition (QEI and Emotron) financials in 2QFY12
numbers. The overseas power segment’s EBIT margin, at 2.3% (down 640bp yoy), disappointed
again and is a cause of concern.
Balance sheet deteriorates on macro/micro headwinds
As at 1HFY12-end, consolidated inventory days rose to 62 days of sales from 43 days as at
FY11-end and debtor days rose to 101 days of sales vs 93 days as at FY11 end. New working
capital (excluding cash) rose to 51 days of sales vs 31 days as at FY11 end. Gross debt
increased by 107% (from FY11-end) to Rs9.4bn, possibly led by funding needs for recent
overseas acquisitions and working capital requirements.
We await further clarity on the results in tomorrow’s investor meet
CRG’s investor meeting will be held tomorrow at 10:15 IST. We await further clarity on 2QFY12
results from management. We will then review our earnings and target price.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
CRG's 2QFY12 consolidated PAT at Rs1.16bn (down 45% yoy) was lower than our expectation
of Rs1.42bn. Segmental analysis reveals weak growth and margins across the board. The
balance sheet too has deteriorated on macro and micro headwinds. We will review our earnings
and TP post tomorrow's investor meet.
Disappointing 2QFY12 results; margin disappoints again
Crompton’s (CRG) 2QFY12 consolidated revenue of Rs27bn (up 12.8% yoy) was higher than our
estimate of Rs25.7bn led by better-than-expected revenue at overseas subsidiaries of Rs12.5bn
(up 32% yoy). However, EBITDA margin at 8.4% (down 550bp yoy) came below our expectation
of 10%, largely led by a lower-than-expected improvement in overseas margins. Accordingly,
PAT came in at Rs1.16bn (down 45% yoy), lower than our expectation of Rs1.42bn.
Segmental analysis reveals weak growth and margins
Standalone revenue growth was flat yoy at Rs14.5bn; the power segment saw de-growth of 7%
yoy to Rs6bn, the consumer segment saw tepid growth at 3.6% yoy to Rs4.8bn (slowdown
continued from 1Q) and industrial growth slowed to 9.4% yoy to Rs3.8bn from high double-digit
growth seen in the last six quarters. Standalone EBIT margins declined across segments by 300-
600bp (see Table 2). Overseas subsidiaries’ revenue was up 32% yoy to Rs14.5bn, led by
currency gains (7.7%) and inclusion of recent acquisition (QEI and Emotron) financials in 2QFY12
numbers. The overseas power segment’s EBIT margin, at 2.3% (down 640bp yoy), disappointed
again and is a cause of concern.
Balance sheet deteriorates on macro/micro headwinds
As at 1HFY12-end, consolidated inventory days rose to 62 days of sales from 43 days as at
FY11-end and debtor days rose to 101 days of sales vs 93 days as at FY11 end. New working
capital (excluding cash) rose to 51 days of sales vs 31 days as at FY11 end. Gross debt
increased by 107% (from FY11-end) to Rs9.4bn, possibly led by funding needs for recent
overseas acquisitions and working capital requirements.
We await further clarity on the results in tomorrow’s investor meet
CRG’s investor meeting will be held tomorrow at 10:15 IST. We await further clarity on 2QFY12
results from management. We will then review our earnings and target price.
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