Buy Crompton Greaves India; target of Rs. 310: Jaypee Capital

Posted by dinesh
Bangalore: Jaypee Capital is bullish on Crompton Greaves and has recommended buy rating on the stock with a target of Rs. 310. According to Jaypee Capital, Crompton Greaves has an order backlog of Rs. 34 billion in standalone business and Rs. 64 billion in consolidated entity. Crompton Greaves has a book to bill ratio of 0.7 times FY10 revenues. It continues to be a preference in the power T&D space on the basis of better operational efficiency, profit margins, working capital management and cash generations compared to peers.


Crompton Greaves is engaged in designing, manufacturing and marketing technologically advanced electrical products and services related to power generation, transmission and distribution, besides executing turnkey projects. The Company's business segments comprise power systems and consumer products. It has geographical operations in Asia, Africa, North America, South America, Europe and Australia. In August 2009, the Company acquired a 51 percent interest in Brook Crompton Greaves Ltd.

It is valued at 20x PE multiple of FY12E earning per share (EPS) of Rs. 15.5 to arrive at a target price of Rs. 310 per share indicating an upside of 23 percent from current levels.
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