Crompton Greaves tanks 7% after Q3 results; divestment to chart stock direction

NEW DELHI: Shares of Crompton Greaves slumped nearly 7 per cent in Monday’s trade even as the company reported a net profit of Rs 95.73 crore in the December quarter, compared with a Rs 95.73 crore net loss in the year ago quarter.

The numbers failed to lift the counter as the stock dropped 6.67 per cent to hit a low of Rs 66.45 on BSE. Experts said that Crompton Greaves results were above estimates, driven by higher execution and profitability mainly in the domestic industrial division.

“We ascribe a PER of 20x (15x earlier; increase target multiple 1) anticipating improving margin trend going ahead in 2HFY18 and beyond; 2) divestment of ZIV to improve balance sheet health) on FY18E earnings and arrive at a target price of Rs 76.5 (Rs 59 earlier) on company's stock,” said Kotak Securities in a nte.

The brokerage has upgraded the stock’s rating to 'ACCUMULATE' from 'SELL' earlier, but noted that the stock movement in near to medium term would depend on how successful divestment of international business (including ZIV) is.