Result Update: Greaves Cotton Ltd - BUY - TP Rs.153 - Kotak

Key Highlights

- Greaves Cotton (GCL) reported good numbers, which topped our revenue estimates. Profits were broadly in line though a tad lower as EBITDA margins lagged our estimates.

- The management remains optimistic of the growth in agriculture equipment and spare parts business.

- The company's largest revenue segment ie three-wheeler engines business has been going through a prolonged phase of slowdown due to 1) preference towards four-wheeler SCVs 2) Shift away from diesel engines due to enviro-norms and 3) Emergence of electric vehicles. GCL is responding to this challenge by positioning itself as a fuel-agnostic engine maker including electric mobility.

Valuation and Outlook

- GCL is currently trading at14x and 13x FY19 and FY20 earnings respectively, which is at a discount to peers. We maintain BUY in view of reasonable valuations and attractive dividend of ~ 4.2%.

Shares of GREAVES COTTON LTD. was last trading in BSE at Rs.141.55 as compared to the previous close of Rs. 131.05. The total number of shares traded during the day was 496988 in over 5324 trades.

The stock hit an intraday high of Rs. 143 and intraday low of 132. The net turnover during the day was Rs. 68613369.

Source : Equity Bulls

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