Motilal Oswal - CG Power and Industrial Solutions (CGPOWER) MOSL: CG POWER AND INDUSTRIAL (Upgrade to Neutral)-Above-estimate op. performance led by Industrial segment

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Motilal Oswal

MOSL: CG POWER AND INDUSTRIAL (Upgrade to Neutral)-Above-estimate op. performance led by Industrial segment

â€‹CG Power and Industrial: Above-estimate op. performance led by Industrial segment

(CGPOWER IN, Mkt Cap USD0.7b, CMP INR76, TP INR80, 4% Upside, Upgrade to Neutral)

Standalone operating performance exceeds estimate: Sales rose 12% YoY to INR12.6b (est. of INR11.7b), driven by growth of 19% in Industrial segment and 6.5% YoY in Power segment. EBIDTA grew 5% YoY to INR0.7b (est. of INR0.6), with the margin of 5.2% in line with our estimate of 5.1%. Adj. PAT of INR0.2b missed our estimate of INR0.4b due to higher-than-estimated interest cost (INR525m v/s est. of INR267m) and tax charges (43% of PBT v/s est. of 20%).
Consol. perf. impacted by loss of sales in Indonesia and US trading arm: Consol. revenue (incl. Indonesian subsidiary) fell 6% YoY to INR14.4b in 1QFY18, impacted by loss of sales in Indonesia (USD20m) due to Ramadan, and US trading arm (USD10m). Power Systems sales declined 17% YoY, while Industrial segment grew 13% YoY. EBIDTA declined 67% YoY to INR0.5b, with the margin contracting 590bp YoY to 3.1%. Adj. loss for the quarter was INR0.5b, as against profit of INR0.7b in the year-ago period. An impairment loss of INR0.4b was booked in 1QFY18 due to sale of power business in the US in 1QFY18 (INR0.2b), while the balance is accounted for by overseas Power T&D subs.
Sale of power business in US concludes; receives binding offer for sale of power business in Hungary: CRG concluded the sale of its power business in the US for USD37m in July 2017, and has also received binding offer for the sale of its power business in Hungary for a consideration of EUR38m. CG Power expects the deal to conclude by November 2017.

14/08/2017 8 EN

Underlying

CG Power and Industrial Solutions

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.

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INE067A01029 National Stock Exchange of India India

Provider

Motilal Oswal

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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MOSL: CG POWER AND INDUSTRIAL (Upgrade to Neutral)-Above-estimate op. performance led by Industrial segment

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