Sharekhan has given Buy recommendation for Greaves Cotton with a target price of Rs. 196 in its research report issued on Jun 03, 2022
Sharekhan’s research report on Greaves Cotton
A well-known family-owned global investor, Abdul Latif Jameel, agreed to invest US$150 million in Greaves’ EV arm to acquire 35.8% stake in the EV subsidiary at a post valuation money of US$419 million, valued at 6.2x its FY2022 sales of the EV arm. Management remains positive on its diversification strategy and continues to focus on the e-mobility space. Greaves is expected to deliver a 21.2% revenue CAGR during FY2021-FY2024E and see a sharp rise in margins, leading to an earnings CAGR of 108.2%. The stock trades at a valuation of P/E multiple of 27x and EV/EBITDA multiple of 15.7x its FY2024E estimates.
Outlook
We maintain Buy on Greaves Cotton Limited (Greaves) with a revised PT of Rs. 196, owing to robust business outlook for its mobility business, new revenue streams, and better valuations.