Hold Greaves Cotton; target of Rs 80: ICICI Direct

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ICICI Direct's research report on Greaves Cotton

Greaves Cotton’s (GCL) standalone revenues came in at Rs 147.1 crore, down 69.2% YoY, (below our estimate of Rs 175.8 crore). Engine segment revenues came in at Rs 140 crore, down 67.7% YoY. E-mobility segment revenue declined 52.5% to Rs 8.9 crore due to business disruptions amid Covid-19. At the EBITDA level, it posted a loss of Rs 21.7 crore YoY (vs. EBITDA of Rs 61.3 crore in Q1FY20) owing to higher employee expenses, operating expenses and less revenue booking. Loss after tax was at Rs 24.2 crore (vs. PAT of Rs 39.8 crore in Q1FY20), partly impacted by only marginal fall of 4% in depreciation and lower other income that fell 71% to Rs 2.2 crore YoY.

Outlook

We value GCL (base business at 12.5x on FY22E, Ampere at 1.5x P/sales on FY22E) at Rs 80/share and maintain HOLD rating.

For all recommendations report, click here

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