Crompton Greaves | Q3FY15 Result Update | Below estimates on all front; EBITDA continues to disappoint | We assign "BUY" rating with target price of Rs 210 :: IndiaNivesh

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Crompton Greaves: Near-term issues may mask improving business trends for a while ::Kotak Sec, report

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Near-term issues may mask improving business trends for a while. 3QFY15 results do not bode well for near-term performance as: (1) backlog is down 15% yoy (delays in domestic orders awards; currency plays spoilsport for overseas), (2) rework-related losses over the next few quarters will mask improving margin trends overseas (key entities are making EBITDA profit) and (3), benefit of recent automation/systems orders (now at 40% of overseas backlog) will take time to reflect in business. We bake into our estimates (1) stricter estimates for overseas power and non-consumer domestic businesses, and (2) swing in Euro-INR rates. TP revised to `200 from `210.

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Overseas worries resurface Crompton Greaves’ 3QFY15 ::HDFC Sec, report

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Crompton Greaves - Turnaround Caught in a Bind; Result Update Q3FY15 :Edelweiss

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BUY CROMPTON GREAVES; Target Price Rs. 220 ::Kotak Securities

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CROMPGREAV

Recommendation BUY ( + )

Target Price Rs. 220

Current Price (On report dt.) Rs.184.8

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Crompton Greaves: Slowly getting back in shape:: Kotak Sec, report link

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Crompton Greaves (CG) :: Angel Broking Diwali Top Picks (Diwali Muharat)

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Crompton Greaves Expect gradual recovery :: Prabhudas Lilladher

! High quality improvement cost led to miss in PAT: Crompton Greaves (CRG)
reported consolidated profits of Rs247m for Q4FY13, lower than our and street
estimates (PLe: Rs774m). International subsidiaries reported loss of Rs845m in
Q4FY13, higher than our estimate of Rs450m. Higher-than-expected stabilization
costs like quality improvement cost (high un tanking rate issue) and LDs led to
losses in subsidiaries. The company incurred cost of Rs770m in the quarter
related to stabilization cost (Rs3bn for FY13). CRG highlighted that stabilization
cost was high in the quarter due to quality improvement related cost but most
issues related to design and processes have been sorted and cost should trend
downward significantly in the next two quarters. Belgium-related restructuring
is completely over and most employees have parted in Q4FY13. Hence, full
impact of savings in employee cost (~Rs200m/quarter) should be visible from
Q1FY14. Operations in Hungary have stabilised faster-than-expected and the
plant has already delivered 18 power transformers in Q4FY13 and also has been
EBIT positive. Most of the incremental losses are from the Belgium and Canada
plant which is expected to reduce (as benefits of restructuring and quality
improvement exercise fortify and LDs reduces over the next two quarters). CRG
also highlighted that various initiatives planned by the company like improved
offering, global sourcing, manufacturing foot print and continuous improvement
initiatives programmes have delivered cost saving/margin improvement of
225bps for FY13.

Trends: Crompton Greaves, SAIL, Central Bank, Reliance Broadcast, Micro Technologies, Lovable Lingerie :: Business Line :: Business Line

 

Technicals: Crompton Greaves, SAIL, Central bank, Reliance Broadcast, Micro Technologies, Lovable Lingerie :: Business Line

 

Crompton Greaves-Motilal Oswal research report

 Crompton Greaves' (CRG) 3QFY13 operating performance was below
expectations, largely impacted by losses in overseas business, constrained
business environment in domestic power segment and restructuring costs.
 Consolidated revenue at INR29.7b, declined 1.9% YoY, in line with our estimate.
Reported EBITDA margin was 0.1%. Consolidated net loss was INR1.9b (PAT of
INR1b in standalone business and losses of INR2.9b in subsidiaries).
 3QFY13 results include non-recurring restructuring costs of INR2.04b (INR1.2b
of employee retrenchment costs and INR830m of other incidental costs) in
Belgium. Adjusted for these, consolidated EBITDA margin was 2.9% below
our estimate of 4.7%. Adjusted net profit was INR149m (Standalone: net
profit of INR1b; Overseas: net loss of INR924m) v/s our estimate of INR370m.
 Consolidated order intake declined 34% YoY (Standalone: down 19% YoY;
Overseas: down 45% YoY) from a very high base last year. Order intake in
overseas business was also lower on account of CRG's deliberate strategy to
focus on execution (consolidated order book up 35% YoY) at this phase of the
ongoing restructuring program, as factories are already running at full
capacity. Order intake in the domestic power segment was robust at INR7.5b,
in line with the quarterly run rate and largely driven by pick-up in SEB orders.
 Restructuring in Belgium has been concluded and all restructuring costs have
been fully provided for. In Hungary, FY13 production is expected at 9,000MVA
(v/s the usual 3,000-3,500MVA per year). The immediate focus areas are
delivery pick-up by customers (EUR17m revenue target in 4QFY13).
 We have cut our FY13/14 EPS estimates by 3/4%, led by lower margin
expectations in the domestic power business. Maintain Buy, with a target of
INR150 (up from INR131 with rollover to FY15E).

Bad times for Crompton Greaves (CG) continue : IndiaNivesh Securities

Bad times for Crompton Greaves (CG) continue, as the company continued
disappointing across most of the areas.
Standalone business
 CG reported a top-line of Rs 17.4 bn, which is up 7.5% on a year-over-year
basis. Increased traction from fans & appliances contributed to 20.6%
year-over-year growth in Consumer products (~34.8% of Q3FY13 revenues)
top-line. Power systems (~38.4% of Q3FY13 revenues) witnessed 4.5%
year-over-year decline. Decline in segment revenues was mainly due to 20
days shut-down of Nashik factory. In management’s view this shut-down
resulted in a top-line loss of Rs 270 mn.
 EBITDA margins declined 320 bps on a year-over-year basis to 7.6% in Q3FY13.
Increased competition in the domestic power segment has led to project
executions at lower margins. Surge in year-over-year material (10.9% up to
Rs 13.1 bn) & other expenses (14.4% up to Rs 1.9 bn) led to EBITDA margin
compression.
 In line with EBITDA margin movement, PAT margins declined from 7.8% in
Q3FY12 to 6.1% in Q3FY13. PAT margin compression was restricted, as other
income increased by 92.2% to Rs 259.7 mn.
Consolidated business
 CG reported a consolidated top-line of Rs 29.7 bn against our expectations
of Rs 29.7 bn. The reported top-line numbers declined 1.9% on a year-over-year
basis. However, they were up 1.6% sequentially. Sharp slow-down in
International Power business led to 9.9% decline in Power Systems (61.2% of
Q3FY13 revenues) top-line.
 CG reported an EBITDA of Rs 20.1 mn against our expectations of Rs 1.3 bn.
From EBITDA margins perspective, EBITDA margins declined from 6.0% a
year-ago to 0.1% in Q3FY13. Such decline in year-over-year EBITDA margins is
mainly on account of 46.5% increase in other expenses (to Rs 4.7 bn). Other
expenses during the quarter included ~Rs 1.0 bn of restructuring expenses
(of this ~Rs 830 mn is for Q3FY13 and the remaining ~Rs 250 mn is for Q1FY13
and Q2FY13).
 The company reported a net loss of ~Rs 1.9 bn against our PAT expectations
of Rs 377 mn. The reported PAT margins were at negative 6.4% (vs. positive
2.5% a year ago). In Dec, 2012, CG completed restructuring exercise at their
Belgium plant. As part of restructuring initiative, 199 employees were laid
down and paid Rs 1.2 bn as retrenchment expenses (shown under exceptional
item). On adjusting for the same, the net loss margins of the company were
at 2.3%. Management claims that the restructuring process at their Mechelen
Plant, Belgium is completed & now they would end up saving annually Euro
~14-15 mn. Recent ZIV acquisition, mostly funded through debt, in our view
led to 89.3% increase in year-over-year interest expenses (to Rs 212.6 mn).
 International Industrials business (i.e. Emetron subsidiary) reported positive
operating performance, while forex loss dragged down the overall segment’s
EBIT margins from negative 8.4% a year-ago to negative 9.0% in Q3FY13.

Crompton Greaves:: Multiple strategies to emerge as 'global corporation':: Motilal Oswal

Multiple strategies to emerge as 'global corporation'
Spain, Hungary operations to drive growth
 We visited i) Tapioszele (Hungary) where Crompton Greaves (CG) manufactures
power transformers, rotating machines and GIS substations and ii) Bilbao (Spain)
where the recently-acquired ZIV and the global headquarters of CG's newlyformed
fourth business unit, power automation, are located. We also interacted
with the senior management team, including Mr Laurent Demortier (MD and
CEO), business heads and operating management across divisions.
 We noticed an increased pace of urgency to emerge as a 'global corporation'
from India. Several steps to enhance product portfolios, geography reach, correcting cost structure etc are being accelerated.
Though the reported financials continue to disappoint, the operating management demonstrated a strong commitment
to execute the long term plan.
 The transition phase led to several moving aspects, which are challenging to monitor and stock's reaction to any slippages
has been significant. In our view, CG's performance would largely be driven by an improvement in overseas business,
though standalone performance would protect downsides. We estimate overseas business EPS loss of INR4.7/sh in FY13
(led by the restructuring costs in Belgium/Hungary) and breakeven in FY14 (as benefits of several initiatives show initial
results). Standalone business' performance is expected to be steady, with EPS at INR8.2/sh in FY13 (up 4% YoY) and
INR9.2/sh in FY14 (up 12% YoY). We maintain Buy, with a target price of INR131.

Angel Broking - Crompton Greaves - RU2QFY2013 - Result Updates

Crompton Greaves - RU2QFY2013

Crompton Greaves - Acquires ZIV group for EUR 150mn : Edelweiss Research PDF link

Crompton Greaves (CG) has acquired 100% of ZIV (global leader in high value smart grid and automation solutions segments for industrial and utilities companies) for an enterprise value equivalent to EUR150mn. ZIV is a provider of digital equipment for Grid Automation and Advanced Metering Infrastructure (AMI). The company operates in more than 50 countries, with major operations located in Brazil (Rio de Janeiro), India (Bengaluru), Spain (Madrid, Barcelona, Bilbao) and US (Chicago). It has installed more than 1.4 mn IEDs for utilities and industries across the world. We await further clarity from CG on key valuation rationale and financials of ZIV, post which we will release a detailed note (refer next page for CG’s acquisition history).

Crompton Greaves: "One CG. Fast CG. Lean CG." :MOSL

"One CG. Fast CG. Lean CG."
FY12 Annual Report suggests several operational initiatives
 FY12 performance impacted by various cyclical and structural factors
 CG Global Overseas: Low cost locations witness revenue decline; Belgium / Canada /
Hungary report sharp profitability decline
 Key Growth Drivers: Renewables / turnkey projects, industry segment - integration
motors with drives and increased internationalization, expanding automation footprints.
 Valuation and view: We arrive at price target of INR154 (up 19% YoY), based on 12x
FY14 PER (standalone) and 8x EV/EBITDA FY14 (overseas). Maintain Neutral.

Crompton Greaves To believe or not is the question! : Prabhudas Liladhar

Crompton Greaves – Risk-Reward Ratio Turns Favourable; We Upgrade To Buy :: Nirmal Bang

Angel Broking -Crompton Greaves - RU4QFY2012 - Result Updates - PDF link

Technical Query Corner: Titan, canara bank, JSW steel, Rohit Ferro, Crompton Greaves, Honeywell, Bosch, :: Business Line

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Please advise on the outlook for Bosch and Honeywell Automation India. Can I buy and hold them for long-term?

N.S. Ganesan

Bosch (Rs 9,005.9): Bosch continues to be a trail-blazer in 2012 as well. The stock is up 35 per cent so far this year.

The stock is in a strong structural uptrend since the March 2009 low. This uptrend will be threatened only if the stock goes on to close below Rs 6,425. Subsequent supports for the stock would be Rs 6,062 and Rs 5,314.

Medium-term supports for the stock are at Rs 8,164 and Rs 7,501. Investors with short- to medium-term horizon can accumulate the stock on declines as long as it trades above Rs 7,500.

Immediate target for the stock is Rs 10,162. Long-term target for the stock is at Rs 11,032.

Honeywell Automation (Rs 2,477.3): Honeywell Automation is in a long-term down move since the July 2010 peak of Rs 3,010. But this decline has halted at the key long-term support at Rs 1,663 and the stock is once again reversing from its long-term resistance band between Rs 3,000 and Rs 3,300. Investors with short-term perspective can divest their holdings when the stock nears this resistance band.

Medium-term support for the stock is at Rs 2,280 and this can serve as support for medium-term investors. Long-term support for investors is, however, at Rs 1,620. Investors need to start worrying only on a strong close below this level. Long-term target on close above Rs 3,350 is Rs 4,097.