Greaves Cotton (GCL) is leading diversified engineering company with a presence in automotive, non-automotive, aftermarket, retail, electric mobility solution and finance. The company recently reported mixed Q3FY22 numbers amid supply disruptions.
E-mobility and new initiatives businesses may provide much needed long term growth uptick amid languishing engine volumes, said domestic brokerage and research firm ICICI Securities in a note. It has maintained its ‘Hold’ rating on the multibagger stock, that has rallied over 124% in a year, with a target price at ₹220 per share. However, the stock has declined about 11% in the last five trading sessions.
Transformation strategy to increase E-mobility and new-initiatives business share to drive long term growth and help transform and de-risk its business, the brokerage note stated. Further, consolidation of manufacturing operations into Megasites to bring higher operational efficiencies and reduced fixed costs in the long run could act as key triggers for future price performance, as per ICICI Securities.
Greaves Cotton standalone revenue for the third quarter came in at ₹300.5 crore, down 31.2% on a year-on-year (YoY) basis whereas EBITDA declined 68% from the year-ago quarter, impacted by restructuring, pandemic, higher commodity prices. Consequently, standalone adjusted net profit came at ₹9.3 crore, declining by 70.7% YoY.
Though, new business share increased to around 30% while auto engine reduced to around 37% from FY17 to FY21. Overall, B2C share increased to around 60% in FY21. The brokerage believes that E-mobility is expected to drive future growth.
Separately, ICICI Securities said it also likes Timken India in its coverage as Timken has a strong balance sheet coupled with decent growth prospects. The brokerage's Buy rating on Timken India shares comes with a target price of ₹2,405 per share.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
