Crompton Greaves trades ex-demerger

Crompton Greaves shareholders will receive one equity share of Crompton Greaves Consumer Electricals.

Crompton Greaves is trading at Rs 43.20 on the BSE after the stock was quoted ex-demerger of its consumer products business with effect from today.

The board of directors has fixed March 16, 2016 as the ‘record date’ for the purpose of reckoning names of the equity shareholders of Crompton Greaves entitled to receive shares of Crompton Greaves Consumer Electricals Limited - the resulting company, pursuant to the scheme of demerger approved by the High Court of Bombay.

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The shareholders holding one equity share of Crompton Greaves on the record date will receive one equity share of Crompton Greaves Consumer Electricals.

Shares of Crompton Greaves hit an intra-day low of 40.50 on the BSE. The trading volumes on the counter more than doubled with a combined 39.01 million shares changed hands on the BSE and NSE till 10:23 AM.  The stock closed at Rs 155 on the BSE and NSE.

Religare Institutional Research maintains ‘buy’ rating on the stock with a target price of Rs 55 per share.

“The demerged power & industrial business will be debt-free post conclusion of the recently announced sale of international businesses. This along with Crompton Greaves’ renewed focus on the B2B business would lead to a meaningful improvement in its return ratios from here on,” said in a report dated March 14, 2016.

We value the consumer business at Rs 115/share and the power & industrial business at Rs 55/share (or 13x FY18 PE), it added.