IGI Logo

Auto lags, non-mobility picks up…

Greaves Cotton’s (GCL) standalone revenues came in at | 457 crore, up 27.1% YoY, 4.6% QoQ. Consolidated revenue grew 35% YoY, 5.2% QoQ led by strong growth in the EV segment. Engine segment revenues came in at | 425 crore, up 28% YoY, 3% QoQ. On the other hand, E-Mobility segment revenue grew 100% YoY, 19.5% QoQ to | 69.09 crore. Standalone EBITDA increased 54.9% YoY to | 47.3 crore and fell 12% QoQ.

Standalone EBITDA margins improved 186 bps YoY to 10.4% whereas the same fell 196 bps on a QoQ basis. On a consolidated basis, EBIDTA came in at | 41.59 crore, up 76% YoY, down 15% QoQ. Consolidated EBIDTA declined sequentially due to EBIT loss of | 11.2 crore (exceptional item of | 4.2 crore) in the EV segment. Adjusted PAT came in at | 23.6 crore, up 71% YoY.

Auto volumes continue to struggle…

Q4FY21 engine segment volume came in at 43338 units vs. 46784 units in Q4FY20, down 7% YoY. A 22% fall in auto engine volume was supported by a 56% rise in non-auto engines volume. Auto engine segment was largely marred by a decline in passenger 3-W volumes. In turn, this was affected by social distancing norms and rise in personal mobility. However, the goods carrier portion on the 3-W side still remained buoyant.

Non-auto engine reported strong growth led by shift from manual labour to mechanised labour in sectors like agriculture, construction, etc, coupled with lower cost Chinese products getting replaced by high quality Indian products. On nonauto side, power genset volumes grew 49% YoY to 1100 units whereas the light equipment business (pumpset, power tiller, other) volumes grew 30% YoY to 15557 units. Overall new business initiatives contributed ~30% to revenue in Q4FY21.

E-Mobility –Future ahead…

E-mobility segment registered 69% jump in volumes from 5947 units to 10075 units. Going ahead, we believe the momentum will continue with high speed segment in E-2W and E-Ricks contributing a larger share in the growth plan. The management has shared a | 700 crore capex plan for 10 years (capex + working capital) on a proportionate basis. Further, the company is continuously working on increasing localisation with the only major import being lithium ion cells. Going ahead, increasing dealer network, Ampere Vehicle Finance along with continuous innovation and product improvement should propel future growth in e-mobility segment.

Valuation & Outlook

While new business segments look promising, the traditional engine segment continues to remain sluggish. We value GCL’s base business at 18x FY23E EPS and Ampere at 2x FY23E Sales. We have a BUY rating (earlier HOLD) on the stock with a revised target price of | 160 (earlier | 90).

To Read Complete Report & Disclaimer Click Here

https://secure.icicidirect.com/Content/StaticData/Disclaimer.html

Above views are of the author and not of the website kindly read disclaimer