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| Crompton Greaves: Power push |
| Shobhana Subramanian / Mumbai May 27, 2009, 00:43 IST |
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 Crompton Greaves was able to report good numbers in the March 2009 quarter on the back of its power systems division, which accounted for a little over half of standalone revenues and nearly three-fourths of consolidated revenues. The division reported a robust 24 per cent y-o-y rise in revenues, offsetting the low growth in industrial systems (due to the slowdown in the capex cycle) and consumer products segments.
The combined performance of Crompton’s international subsidiaries (including Ganz, Pauwels and Microsol) was relatively better with a 28 per cent revenue growth, helped by strong demand in Europe and partly due to the rupee depreciation against the euro. Thus, consolidated revenues for the quarter were up 21.7 per cent to Rs 2,460 crore. Ganz, its Hungarian transformer and switchgear subsidiary, reported a profit before interest and tax in 2009-10, but is loss-making at the net level due to goodwill write-off.
With lower raw material prices, profit margins improved across all the three divisions. However, a sharp jump in employee costs meant a decline in margins. This in turn, restricted the expansion in operating profit margins at the consolidated level, which were nearly stagnant 13.4 per cent.
Crompton’s order backlog may have grown 20 per cent y-o-y to Rs 6,100 crore in March 2009, but it fell marginally over the December 2008 quarter. Demand in industrial systems is unlikely to pick up before the second half of 2009-10, while power systems should grow at around 20 per cent in 2009-10. Analysts expect the company to report a 15 per cent growth in revenues though there could be some margin pressure due to increased competition in the domestic market, the rupee appreciation and higher input costs. However, at Rs 252, up 55 per cent in one month, the stock trades at 15 times estimated 2009-10 earnings leaving little room for upside in the near-term.
Associate with RAM PRASAD SAHU and VISHAL CHHABARIA
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