Market Price Rs 139 (FV 2) Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 3400 crs Date: 8th Jan 2016
Target : Rs 180 Time frame: 1 year
About the Company & Products :
Greaves Cotton limited, with turnover of Rs. 1700 crore, multi-product, multi-Iocational company is one of the leading engineering companies in India with core competencies in Diesel, Petrol Engines, Farm equipment and Gensets. The Company sustains its leadership position through seven state-of-the-art manufacturing units which produce world class products backed by comprehensive marketing and service / parts network throughout the country.
The company is into Engine Business which is divided into Automative & Industrial, into Product business which is in Farm and Auxilliary, after Market Business & International Business.
Greaves cotton has a ROCE of 21% for the last year. It has paid divided of 125% and the book value is at a healthy 34 per share. Revenues were down from (2013-14) 1719 crs to 1689 crs in the year 2014-15. Net profit decreased from 113 crs to 82 crs. EPS also declined from 4.63 crs to 3.34 crores.
The company is expected to do well in the current year as it has already crossed revenues of 800 crores and Net profit of almost 100 crores in the first 6 months.
This indicates better times to come in this year.
Promoters hold about 51% , Fii’s hold about 5% and Dii’s hold 34% of equity and the rest 10.6% is held by Indian public.
Comparisions to Peers:
There are few players like Greaves Cotton & also being a debt free company it instills confidence for future growth.
The companys name does not reflect the true nature of the business it is in. It is more of an engineering company. The company has paid off all its debts which is a very good sign. The company has a healthy ROCE which indicates better times to come in the future.
The current rate of Rs 139 per share is tipped to touch Rs 180 in the next 1 year time frame. If kept for longer, it can become a mulitbagger in few year.
( Disclosure: The analyst has no holdings in the company as on date of issue being published).
Registration No: INH000001717