MOSL: CG POWER AND INDUSTRIAL (Neutral)-Results exceed estimates-funding of subsidiary loss continues
CG Power and Industrial: Results exceed estimates; funding of subsidiary loss continues
(CGPOWER IN, Mkt Cap USD0.6b, CMP INR62, TP INR63, 2% Upside, Neutral)
- Standalone operating performance above estimate: Sales rose 22% YoY to INR14.3b (est. of INR14.1b), driven by 28% LTL growth in the industrial segment and 16% LTL growth in the power segment. EBIDTA increased 42% YoY to INR1.2b, with the margin of 8.1% ahead of our estimate of 7.5%. Adj. PAT of INR0.63b (+31% YoY) was ahead of our estimate of INR0.43b, led by higher other income (INR484m v/s est. of INR325m). Extraordinaries booked during the quarter stood at INR4b due to (a) INR1b of loss funding for Hungary biz, (b) INR1.7b of inventory write-down relating to the transformer business and (c) INR1.5b loss on winding down of the projects business in the power systems segment. Until the Hungary deal is concluded (likely by end-June), INR1b of losses would continue to be funded by CG Power India.
- Gross debt at INR25b as of Mar’18: Gross debt stood at INR25b, of which INR19b is related to continuing operations, while the rest is related to discontinued operations. With the sale of Hungary business, INR2.5b of debt is likely to be removed. Loans & advances and investments in subsidiaries stood at INR27b (up by INR4.5b over Sep’17). The increase was driven by (a) INR2b of loss funding at Hungary, (b) INR0.4-0.5b for WC funding and (c) balance for paying off loans at subsidiaries.
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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