X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Crompton: Eye improvement with caution - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Feb 25, 2002

    Crompton: Eye improvement with caution

    Crompton Greaves Limited, India's largest private sector electrical equipment manufacturer continues its battle for survival. Its performance in 3QFY02 is encouraging. During the December quarter, the company has declared a 12% topline growth and Rs 22 m net profit (loss of Rs 371 m in 3QFY01). Cosequently, the stock has surged by over 40% in the last couple of months.

    (Rs m) 3QFY01 3QFY02 Change 9m FY01 9m FY02 Change
    Net Sales 2,972 3,331 12.1% 7,851 10,069 28.3%
    Other Income (incl. Extraordinary) 19 36 85.9% 44 109 150.6%
    Expenditure 3,253 3,036 -6.7% 8,940 9,379 4.9%
    Operating Profit (EBDIT) -281 295 -205.1% -1,089 690 -163.3%
    Operating Profit Margin (%) -9.5% 8.9%   -13.9% 6.8%  
    Interest 235 190 -19.2% 694 554 -20.2%
    Depreciation 102 119 17.0% 339 336 -1.1%
    Profit before Tax -599 22   -2,078 -91  
    Extraordinary items 227 0   1,212 141  
    Tax 0 0   3 11 324.0%
    Profit after Tax/(Loss) -371 22   -869 40  
    Net profit margin (%) -12.5% 0.7%   -11.1% 0.4%  
    No. of Shares 52.4 52.4   52.4 52.4  
    Diluted Earnings per share* -28.4 1.7   -22.1 1.0  
    P/E Ratio   18.1     29.9  
    *(annualised)            

    During the nine month period (April - December 2001), Crompton posted a 28% growth in turnover and reported Rs 40 m as net profit. However, extraordinary income continues to help Crompton report a positive bottomline. During the nine month period last year, Crompton earned Rs 1,212 m as extraordinary income (sale of Skycell - Rs 985 m and Rs 227 m as net surplus of transfer of low tension control gear unit and Faxemail). In the current year too, Crompton earned Rs 314 m from sale of land, but had to incur Rs 173 m as advances written off. The net extraordinary income of Rs 141 m is reflected as extraordinary income this year.

    During the December quarter, the company has completed the transaction for the sale of its investments in CG Glass to Koninklijke Philips Electronics NV for a consideration of Rs 171 m. The resultant loss of Rs 7.8 m has been accounted for in this quarter. Also, the board of directors of the company has decided to divest the company's shareholding in CG Newage Electrical Ltd.

    Cost break-up
    (Rs m) 3QFY01 3QFY02 Change 9m FY01 9m FY02 Change
    Material costs 2,222 2,194 -1.3% 5,835 6,766 15.9%
    Staff costs 505 438 -13.4% 1,612 1,280 -20.6%
    Other expenditure 526 405 -23.1% 1,493 1,334 -10.7%
    Total expenditure 3,253 3,036 -6.7% 8,940 9,379 4.9%

    During the December quarter, the company has completed the transaction for the sale of its investments in CG Glass to Koninklijke Philips Electronics NV for a consideration of Rs 171 m. The resultant loss of Rs 7.8 m has been accounted for in this quarter. Also, the board of directors of the company has decided to divest the company's shareholding in CG Newage Electrical Ltd.

    If we exclude the extraordinary income figure from both FY01 and FY02 numbers, the company will be significantly in the red. The only consolation is the company's continous improvement in operational performance. The turnover is up by 28% in 9m FY02, but the operating expenditure has grown by less than 5% YoY. Therefore, the company is earning positive operating margins during FY02. Added to this, the Skycell stake last year helped Crompton prune its debt burden, resulting in reduced interest expenses this year (down 20% YoY).

    Crompton's efforts at restructuring by selling of non-core businesses as well as change in management control (29.1% of the company's shares, previously held by various Thapar Group companies have been transferred in favour of Mr Brij Mohan Thapar. The Company now forms part of the BM Thapar Group), seem to have brought it back in the reckoning. It is no wonder then the stock price has improved significantly in the recent past.

    However, Crompton still has to cover a long distance before it can be considered as a safe investment. The company's inconsistent past makes investors wary. For Crompton, any improvement in bottomline without the aid of extraordinary income is likely to provide stability to valuations.

    At Rs 30 the stock trades at 30x annualised 9mFY02 earnings.

     

     

    Equitymaster requests your view! Post a comment on "Crompton: Eye improvement with caution". Click here!

      
     

    More Views on News

    BHEL: Margins Dip into the Negative (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The company also saw order inflows of Rs 18 billion during the quarter, which was a massive 41% YoY lower than the previous year's quarter.

    Cummins Ltd: Domestic Revenues the Saving Grace (Quarterly Results Update - Detailed)

    Aug 14, 2017

    The domestic economy continues to grow largely in areas which are positively impacted through continuing government investments in infrastructure.

    ABB: Large Orders Remain Muted (Quarterly Results Update - Detailed)

    Aug 2, 2017

    Decisions on government initiatives and private investments were stalled in anticipation of upcoming tax restructure.

    L&T: Amidst a Challenging Business Environment (Quarterly Results Update - Detailed)

    Aug 1, 2017

    Bank credit to industry remained muted and investment momentum was driven mostly by public sector spending.

    L&T: Private Sector Capex Remains in a Tizzy (Quarterly Results Update - Detailed)

    Jul 24, 2017

    Vast majority of private players remain more concerned with debt payback rather than starting new projects.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    CG POWER & INDUSTRIAL SOLUTIONS LTD SHARE PRICE


    Aug 16, 2017 (Close)

    TRACK CG POWER & INDUSTRIAL SOLUTIONS LTD

    • Track your investment in CG POWER & INDUSTRIAL SOLUTIONS LTD with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MORE ON CG POWER & INDUSTRIAL SOLUTIONS LTD

    CG POWER & INDUSTRIAL SOLUTIONS LTD - WELSPUN CORP COMPARISON

    Compare Company With Charts

    COMPARE CG POWER & INDUSTRIAL SOLUTIONS LTD WITH

    MARKET STATS