Crompton Greaves – update

Crompton Greaves: Buyouts, strong cash position offer comfort – Economic Times

Crompton Greaves posted another impressive quarterly performance for March 2010. Its consolidated profits grew by 40%, despite a modest sales growth…

… The outlook for the company remains strong, as its expansion strategy through acquisition has paid off, backed by a strong cash position. It has also managed its input prices well, which dented the profits of most engineering companies. While the lack of growth in international markets is a drag on topline, Crompton Greaves has used this to its advantage though buyouts, as the targets were available at more attractive prices. Clearly, there isn’t much for the company to worry, for now.

Crompton Greaves: Global concerns emerge – Business Standard

Crompton Greaves’ consolidated financial performance in the March 2010 quarter was disappointing, as revenue grew marginally at 2 per cent to Rs 2,508 crore, compared to the same period a year ago. The domestic market, which grew at 19 per cent, supported the revenue stream…

… Moreover, there are concerns over the fate of its international business, as the Eruozone crisis might take a toll on revenue growth. The stock, like its peers in the engineering and capital goods space, looks expensive at 17 times and 15 times price to estimated earnings for FY11 and FY12, respectively. Attractive acquisitions, faster recovery in developed key markets, and unlocking value from listing of its 32 per cent group power generation company Avantha power will reinforce positive outlook and lead to further re-rating.

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