ICICI Direct has given Hold recommendation for Greaves Cotton with a target price of Rs. 90 in its research report issued on Feb 12, 2021
ICICI Direct’s research report on Greaves Cotton
Greaves Cotton’s (GCL) standalone revenues came in at Rs 436.8 crore, down 11.7% YoY, (above our estimate of Rs 353.1 crore). The engine segment revenues came in at Rs 412 crore, down 7.5% YoY. On the other hand, e-mobility segment revenue grew 47.4% to Rs 57.8 crore. EBITDA declined 30.3% to Rs 53.8 crore YoY (above our estimate of Rs 33.9 crore). EBITDA margins declined 330 bps to 12.3% (vs. our estimate of 9.6%) impacted by higher operating expenses and less revenue booking. Employee cost fell 31.1% to Rs 28.7 crore amid restructuring efforts aiding margins. Adjusted PAT (adjusted for exceptional item) was at Rs 31.5 crore, down 37.6% YoY (above our estimate of Rs 19.4 crore) partly impacted by lower other income.
We value GCL (base business at 12.0x on FY23E and Ampere at 1.0x P/sales on FY23E) at Rs 90 (earlier Rs 75) and maintain HOLD.