Greaves Cotton jumps 4% as analysts turn bullish after results



Greaves Cotton stock rose by 4.6 per cent on Friday to close at Rs 85.90 on the BSE, as analysts turned positive on the company after it posted healthy quarterly numbers. They expect improvement in the auto and agricultural sectors will boost the prospects of the company. Analysts said the expansion in the three-wheeler segment and growth in the small commercial vehicle segment would benefit Greaves Cotton. Both the key original equipment manufacturers (OEMs) for Greaves Cotton in the three-wheeler segment — Atul Auto and Piaggio — have announced expansion plans.

“Whilst Atul Auto is doubling its capacity to 48,000 units a year by FY14, Piaggio has launched a new three-wheeler vehicle called APE City in four variants (petrol, diesel, LGP and CNG) to compete with Bajaj Auto (a leader in the three-wheeler passenger vehicle segment),” said a report on the company by Ambit Capital.

Greaves Cotton reported a flat net profit of Rs 34.4 crore in the third quarter ended December 2012 as against Rs 34.2 crore profit registered during the corresponding quarter a year ago. But the engineering firm’s revenue rose 11 per cent to Rs 515.8 crore (Rs 465.1 crore).

In the small commercial vehicles segment, the company is expected to provide engines for Tata Motors’ CNG variant in FY-14.

According to B&K Securities: “The company will go ahead with Phase II — 90,000 capacity addition plans in line with Tata Motors plans, provided market demand remains robust.” The report also added that the company would continue to look for new customers and that discussions were on, on an advanced stage with various potential OEMs.

On the agricultural front, even while demand for equipment remained low due to delayed monsoons and slow release of Government subsidies, Greaves managed to maintain its market share in the various product categories.

Since September 2012 the stock of the company has risen by 28 per cent.

Source: Business Line