MOSL: CG POWER AND INDUSTRIAL (Sell)-Standalone performance ahead of estimates
​CG Power and Industrial: Standalone performance ahead of estimates
(CRG IN, Mkt Cap USD0.9b, CMP INR93, TP INR65, 31% Downside, Sell)
- Standalone operating performance exceeds expectations: Sales rose 7% YoY to INR12.8b (est. of INR11.6b), driven by 16.9% growth in Industrial segment, while Power segment sales were flat YoY. EBIDTA margin at 6.3% was ahead of our estimate of 5.8%. Adj. PAT of INR0.5b exceeded our estimate of INR0.3b, led by higher-than-estimated other income (INR350m v/s est. of INR273m) and tax write-back of INR101m.
- Consol. performance includes Indonesian subsidiary from 4QFY17: Consol. revenue (incl. Indonesian subsidiary) declined 8% YoY to INR17.1b in 4QFY17 due to a decline in Power Systems (-17% YoY). Industrial segment grew 12% YoY. EBIDTA declined 24% YoY to INR1.2b, with the margin contracting 150bp YoY to 6.9%. Adj. PAT of INR376m was down 64% YoY. An impairment loss of INR3b was booked post the sale of ZIV Systems in 4QFY17, while the balance is accounted for by overseas Power T&D subs.
- Sale of ZIV concludes; divestment of power business in US in final stages: CRG concluded the ZIV sale in March 2017 for INR7b, and is in advanced stages of sale of its US-based power systems business. It expects the deal to conclude by June 2017.
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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