MOSL: CG POWER AND INDUSTRIAL (Neutral)-Performance beat led by better-than-expected margins
CG Power and Industrial: Performance beat led by better-than-expected margins
(CGPOWER IN, Mkt Cap USD0.8b, CMP INR90, TP INR90, 0% Upside, Neutral)
- Standalone performance above expectations: Sales rose 11% YoY to INR11.8b (below estimate of INR12.7b), driven by Industrial segment growth of 11% YoY (like-to-like growth of 20% YoY). Power systems segment sales declined 6% YoY on a reported basis (muted like-to-like growth of 3% YoY). EBIDTA grew 4% YoY to INR871m (ahead of our estimate of INR683m), with the margin of 7.4% (-50bp YoY) ahead of our estimate of 5.4%. Adj. PAT of INR0.5b exceeded our estimate of INR0.3b due to lower tax (INR10m v/s our estimate of INR73m) and higher other income (INR454m v/s our estimate of INR250m).
- operational performance better than expectations; provisioning for Hungary business impacts PAT: Consol. revenue (incl. Indonesian subsidiary) grew strongly by 15% YoY to INR15.2b in 3QFY18 (below estimate of INR16.1b). Power Systems sales grew by a muted 3% YoY, while Industrial sales rose 13% YoY. EBIDTA stood flat YoY at INR1.3b (ahead of our estimate of INR1.2b), with the margin down 120bp YoY to 8.4%. In 3QFY18, CG booked provisioning of INR1.2b (INR0.9b operational loss from Hungary sub). Loss from Hungary sub is expected to continue in 4QFY18 as well, as the sale deed is expected to close by Mar'18. Adj. profit was INR0.9b v/s INR0.6b in 3QFY17.
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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