This Article is From Aug 31, 2016

Crompton Greaves Extends Gain Post Q1 Earnings

Crompton Greaves Extends Gain Post Q1 Earnings

Crompton Greaves shares extended gains to the second straight day on Wednesday after the capital goods maker's June quarter earnings met the Street's estimates. Crompton Greaves shares jumped over 4 per cent to hit an intraday high of Rs 85.50, on top of yesterday's 1.8 per cent gains. 

Crompton Greaves net loss narrowed to Rs 10 crore in Q1 compared to a loss of Rs 62 crore in the corresponding quarter of last fiscal. Meanwhile, revenues of Crompton Greaves jumped 39 per cent to Rs 1,424 crore. 

Domestic brokerage Religare said Crompton Greaves' Q1 earnings were in line with estimates as "subsidiary business posted higher margins". 

Crompton Greaves' revenue growth was led by its power systems division, which reported 87 per cent jump in its revenue at Rs 703 crore. 

However, Religare said that the performance of power segment is unlikely to sustain as it included trading gains. But the brokerage expects that the core business of Crompton Greaves to strengthen going ahead as expenses related to the discontinued business will taper off. 

"We think the earnings trajectory for FY18E can surprise on the upside," Religare added. 

Religare has a "buy" rating on Crompton Greaves with a target price of Rs 100. "With an improvement in balance sheet and cash flows, we find current valuation attractive," the brokerage said. 

Crompton Greaves shares closed 1.77 per cent higher at Rs 83.30 compared to 0.48 per cent gain in the broader Nifty.