MOSL: CG POWER AND INDUSTRIAL (Neutral)-Marginally below-estimate op. performance
​CG Power and Industrial: Marginally below-estimate op. performance
(CGPOWER IN, Mkt Cap USD2.3b, CMP INR83, TP INR90, 7% Upside, Neutral)
- Standalone performance marginally below expectation: Sales rose 11% YoY to INR12.1b (est. of INR12.9b), driven by growth of 18% in Industrial segment and 6.7% YoY in Power segment. EBIDTA fell 8.8% YoY to INR0.8b (est. of INR0.81), with the margin of 6.4% in line with our estimate of 6.2%. Adj. PAT of INR0.6b was ahead of our estimate of INR0.3b due to lower tax (INR-2m v/s estimate of INR79m) and higher other income (INR615m v/s est. of INR294m).
- Consol. operational performance robust, higher provisioning impacts PAT: Consol. revenue (incl. Indonesian subsidiary) grew strongly by 18% YoY to INR15.6b in 2QFY18, driven by a recovery of lost sales in Indonesia (USD20m) due to Ramadan in 1QFY18. Power Systems sales rose 29% YoY, while Industrial sales grew at a muted 3% YoY. EBIDTA grew 50% YoY to INR1.3b, with the margin expanding 180bp YoY to 8.5%. In 2QFY18, CG booked provisioning of INR4.3b (INR0.9b operational loss from Hungary sub, INR0.3b loss on Jalgaon distribution franchise and INR2.7b loss on account of write-down of goodwill). Adj. loss was INR0.1b v/s profit of INR0.2b in 2QFY17.
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.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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