 "Greaves Cotton extends gain on strong March quarter results")
Greaves Cotton was trading higher by 4% to Rs 146, extending its 7% rally in the past two trading sessions on the BSE, after the company‘s EBITDA (earnings before interest, taxes, depreciation, and amortisation) margin expanded by 500 basis points to 17% in March 31, 2016 quarter (Q4FY16) from 12% in Q4FY15.
Reduction in material cost and value engineering initiatives aided margin improvement during the March quarter.
The net profit of the company during the quarter increased by 58% at Rs 38 crore against Rs 24 crore in the corresponding quarter of previous year. Revenues grew 2.8% at Rs 405 crore over the previous year quarter.
Ambit Capital recommended ‘Buy’ rating on the stock with target price of Rs 198 as Greaves’ auto business can see strong volume growth in FY17.
“We model revenue growth of 15% in FY17 versus flat growth over FY13-FY16E, led by pick-up in demand for cargo vehicles (40% of FY15 volumes) due to softening interest rates, implementation of goods & services tax (GST) and reduction in foreclosure inventory of light commercial vehicle (LCVs) with bankers,” brokerage house said in a results update.
With Greaves developing 3.5 tonne engines recently and getting a healthy response in the Shanghai exhibition, we expect it to add at least one large OEM in the 4W space in addition to Multix announced in June ’15. Moreover, with the renewed focus in the power genset business, the company is expected to double its genset revenues over FY15-FY17, added report.
The stock hit a 52-week high of Rs 149 on the BSE in intra-day trade. The trading volumes on the counter nearly doubled with a combined 475,245 shares changed hands on the BSE and NSE till 11:55 am.
Reduction in material cost and value engineering initiatives aided margin improvement during the March quarter.
The net profit of the company during the quarter increased by 58% at Rs 38 crore against Rs 24 crore in the corresponding quarter of previous year. Revenues grew 2.8% at Rs 405 crore over the previous year quarter.
Ambit Capital recommended ‘Buy’ rating on the stock with target price of Rs 198 as Greaves’ auto business can see strong volume growth in FY17.
“We model revenue growth of 15% in FY17 versus flat growth over FY13-FY16E, led by pick-up in demand for cargo vehicles (40% of FY15 volumes) due to softening interest rates, implementation of goods & services tax (GST) and reduction in foreclosure inventory of light commercial vehicle (LCVs) with bankers,” brokerage house said in a results update.
With Greaves developing 3.5 tonne engines recently and getting a healthy response in the Shanghai exhibition, we expect it to add at least one large OEM in the 4W space in addition to Multix announced in June ’15. Moreover, with the renewed focus in the power genset business, the company is expected to double its genset revenues over FY15-FY17, added report.
The stock hit a 52-week high of Rs 149 on the BSE in intra-day trade. The trading volumes on the counter nearly doubled with a combined 475,245 shares changed hands on the BSE and NSE till 11:55 am.
