Q1FY19 result highlights
Key positives: Strong industrial performance
Key negatives: Weak power performance, higher debt
Impact on financials: FY19/20E Consol Adj. PAT cut by ~21%/15%; Post discontinued ops, FY20E PAT cut by 13%.
Valuations & view
The domestic power business has stabilised, while industrial segment is gaining traction (mkt share gains, orders from railways, margin expansion, etc.). However, the standalone business is funding the sustained international losses (higher debt and higher advances being subsequently written off). Considering a weak balance sheet and delay in consummation of Hungary sale (now in Sept-18) will keep the stock performance in check. Maintain Underperformer.
CG Power & Industrial Solutions is primarily engaged in manufacturing, marketing and distributing electrical products and components and provision of engineering services for power services industries, mainly in India. Co. is also engaged in manufacturing and marketing electrical and electronic equipment for industrial systems and consumer, provision of telecommunication services and investment activity. Co.'s products include transformer, switchgear, fans and appliances, luminaire, light sources, pumps, electric motors and alternators. Co. operates three primary business segments: Power System, Consumer Products and Industrial System.
IDFC Securities Ltd., a subsidiary of the Infrastructure Development Finance Company (IDFC) wherein the Government of India holds a 20% interest, is India's leading equities broker catering to most of the prominent financial institutions, both foreign and domestic investing in Indian equities. A research team of experienced and dedicated experts ensures the flow of critically investigated stock ideas and portfolio strategies for our clients. Our coverage spans across various growth sectors such as agriculture, automobiles, Consumer Goods, Technology, Healthcare, Infrastructure, Media, Power, Real Estate, Telecom, Capital Goods, Logistics, Cement amongst other sectors. Our clients value us for our strong research-led investment ideas, superior client servicing track record and exceptional execution skills.
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