Fundamental Result Update

Greaves Cotton Q1FY20 Result Update



Greaves Cotton came out with muted set of numbers, reflecting the overall slowdown in the auto and auto ancillary space. Standalone revenue for Q1FY20 grew 4.1% YoY to Rs 4768 mn, below our estimate of Rs 4953 mn, due to lower power tiller volumes and sluggish growth in its after-market division. EBITDA came at Rs 613 mn, below our estimate of Rs 698 mn, while EBITDA margin contracted by 45bps YoY to 12.8% from 13.3% in Q1FY19, due to lower after market sales which carry higher margin as well as on account of higher raw material costs (+4.9% YoY) and other expenses (+10.1% YoY). PAT for the quarter stood at Rs 382 mn below our estimate of Rs 461 mn in line with lower EBITDA and also due to lower other income (-28.2% YoY). With overall slowdown in the auto & auto ancillary space, near term trigger for the stock is missing. We maintain our FY20E/FY21E estimates and Hold rating on the stock, however due to lack of near term trigger, cut our target price to Rs 130 from Rs 165 earlier.


Tags: FundamentalResult Update


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