Greaves Cotton Ltd. (GC) |Q2FY15 Result Update | Top-line inline..EBITDA margins better than estimates :: IndiaNivesh

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For Q2FY15, Greaves Cotton reported net sales and EBITDA in line with our estimates.
However adjusted net profit of the company (adjusted for exceptional items) was
better than our estimate mainly on account of lower effective tax rate of ~19%
compared to average tax rate of 27-30% in previous quarters. Led by growth in
Engine segment sales by 1.8% and de-growth in Infrastructure equipment sales by
57.7%, Total net sales of the company showed a marginal decline of 1% y/y to
Rs 4,410 mn (vs our estimate of 4,539 mn). Optimization on material and employee
costs coupled with closing down of loss making construction equipment (CE)
business has helped the company in improving its EBITDA margin by 197 y-o-y to
12.7%. EBITDA for the quarter increased by 17.2% to Rs 560 mn (vs our estimate of
545 mn). Helped by lower effective tax rate, adj net profit of the company increased
y-o-y by 31.2% to Rs 421 mn (vs our estimate of 336 mn).

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