Greaves Cotton Hit by one-offs; Retain BUY :Emkay

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Greaves Cotton

Hit by one-offs; Retain BUY

BUY

CMP: Rs83                                        Target Price: Rs90

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n     Net profit declines by 23% yoy to Rs342 mn – led by 440 bps drop in EBITDA margin (due to one-offs & lower gross margins). Adjusting for one-offs, APAT meets expectations

n     Led by supply ramp-up to Tata Motors, Engines delivers (Sales up 17% yoy, EBIT margins at 16.7%). Infrastructure revenues fall 25% yoy with EBIT loss of Rs28 mn

n     Supply to Tata Motors ramps-up to 5,500 units per month (Vs 4,000 supplied in Sep’11). GCL expects to further ramp-up to 8,000 units per month in FY13E

n     Reduce earnings down by 13% for FY12E to Rs6.0 and by 9% for FY13E to Rs7.2 per share. Retain BUY rating with price target of Rs90 per share