Saturday, April 13, 2013

CROMPTON GREAVES LTD - ACCUMULATE





Crompton Greaves is an India based multinational operating in power ,consumer electronics and lighting space. CG is part of Gautham Thaper led Avantha Group and operating many manufacturing facilities across the world which includes Pauwels (Belgium), Gans(Hungary, Microsol (Ireland), Sonomatra (France), MSE Power Systems (USA) , Power Technology Solutions (UK,  Emotron (Sweden), QEI Inc (USA) and ZIV Group (Spain) .In India Comapny have 22 manufacturing facilities for its various products.



Company’s operations are broadly classified into three divisions – Power Systems,Industrial Products and Consumer electronics.Under the power systems division company manufacturing  Transformers,Switchgear,T&D Systems,Protection Control products ..etc.CG is one of the 10 largest Transformer manufacturers in the world. Its industrial systems division producing Generators,Motors,Alternators..etc. Under the consumer products division company is a reputed manufacturer of Fans,Pumps,Lighting equipments,Home appliances..etc.During the last three years CG’s stock price crashed substantially mainly due to three  reasons.Company reported negative growth in many verticals due to  of overall de-growth  in major economies .Another reason is the cost involved in restructuring its Belgium operations which just concluded .In addition to this  an untimely aircraft purchase and share sale of its erstwhile managing director of the company, Mr SM Trehan dented the image of company and its share price now landed around its multi year low of Rs.90 from a high of Rs.458 ( stock prices adjusted to  split of FV) .I believe ,the protest raised by institutional investors on aircraft purchase issue will help the company to rethink about the importance of fair corporate governance and avoid such untimely decisions in future.In the business front company is expected to start improving from hereon  and report robust growth from FY 2013-14 onwards from a loss in this FY.This is the time to accumulate CG in a phased manner with long term view @ CMP of Rs.90 or in any dip.

Link to company website HERE

38 comments :

  1. Sir, do you think any prospect of SEBI reversing the decision of periodic call option on illiquid scrips or you expect it to continue? The volume in these scrips already fell, and even my online broker (HDFC Sec), made it call and trade, which is very inconvenient?

    ReplyDelete
  2. If SEBI is bothered about the investors they may withdraw and if they want to prove only their side is true and no interest in protecting investors ,they may stick with their decision.I really believe the members who took this decision has not invested a single penny in stock market.

    ReplyDelete
  3. Dear value pick,

    Request your views on Caplin point and Orchid chemicals & pharma.

    ReplyDelete
    Replies
    1. JB Chemicals may be a better choice than Orchid at this point.

      Delete
  4. What's your view on Tilaknagar Ind, Orient Bell and Suzlon for 5+ years investment??

    ReplyDelete
  5. Hello VP Sir,

    Which one would you prefer TV 18 or TV Today? And why?

    ReplyDelete
    Replies
    1. I prefer TV today as a company ,but TV 18 having the popular business channel and hence they can influence share price and investors preferences better than TV today.

      Delete
  6. Dear sir,

    I had invested in Eimco Elecon, now the share is moved to illiquid category, daily no trading is happening, i really dont know how to sell, or i need your advice whether to hold, if holding when i can sell?

    Sathishkumar

    ReplyDelete
    Replies
    1. Dear Satish

      I too in a dilemma ,not able to invest or recommend any good mid/small/micro cap only because of the inclusion in this category or chance to be included in next revision.

      Delete
  7. Hi Sir,

    Do you like Selan Exploration?

    ReplyDelete
    Replies
    1. One of the good companies from this sector ,but no guarantee whether it will be classified as illiquid next time.

      Delete
  8. Dear VP,
    What are your thoughts on Bajaj electricals. should we buy this stock at current level....for 2 year period

    ReplyDelete
  9. Dear Sir, i have 500 share of Bank of India @ 325. After my purchased, this stock comeing down. So would you like to advice me on this stock. I can hold it for three years too.
    With regard,
    Dinesh Devgan
    Ghaziabad (U.P.)

    ReplyDelete
    Replies
    1. Tracking only Yes Bank and ING Vysya from banking sector

      Delete
  10. Bajaj Elec:- High 234 ,Low 161.
    So i think when it cross 180/-, that time bye this stock in three parts.

    ReplyDelete
  11. Sir, how would you rate the corporate governance of Gautam Thapar group? I am invested in some other companies of the group, so would like to know.

    ReplyDelete
  12. Dear VP Sir,
    What is your view on Glodyne Technoserve, Opto Circuits & Delta Corp for 3+ years investment?

    ReplyDelete
    Replies
    1. Prefer Opto circuit among these three and that itself only for very high risk takers.

      Delete
  13. Dear VP, Kindly share your view about Dishman Pharma..

    ReplyDelete
  14. Hi Sir,

    Can we accumulate Ion Exchange at the current price and declines?

    ReplyDelete
    Replies
    1. Business is expected to improve going forward but not sure whether it will classified as illiquid in next revision

      Delete
    2. Sir, is the next revision expected every month?

      Delete
    3. No ,I think it will happen in every quarter.

      Delete
  15. Sir My Query abt Rain Comm and Finolex Inds..
    Aman..

    ReplyDelete
    Replies
    1. Not tracking rain Com,positive on Finolex Ind

      Delete
  16. As all consumer sector stocks are 52 weeks low CG is not exception,my dad work in company he told mgmt view regarding overseas market becoming very broad these days though improvements in margin may not come in this quarter but definitely by year end they will be right on track,for accumulation purpose result day is best one when it falls to 8-10 % & recovers with analyst rating coming afterwards.,after all its F&O stock :)

    ReplyDelete
  17. Can we not buy then if it is considered as illiquid stock? I read your post on illiquid classification of stocks by SEBI but did not understand is completely.

    ReplyDelete
    Replies
    1. Price discovery not happening in a smooth way and investor participation is very low at present . Situation may improve when more and more investors become familiar with this system.

      Delete
  18. Dear VP, kindly share your view on HIL(:Hyderabad Industries Ltd)

    ReplyDelete
  19. Dear Sir, which one is better at current valuations & market scenario given fact that lead prices in down trend.
    1. Amara Raja Batteries
    or
    2. Exide Industries

    Thanks,
    Mayur

    ReplyDelete
    Replies
    1. Dear VP Sir,
      Suggest 3 stocks with strong growth potential n bussiness model in which can be invested for next 10 year for multi returns?

      Delete
    2. I prefer Amara Raja over Exide from this sector

      Delete
    3. Dear Sir,

      I have shares of Amara Raja Batteries purchased @ 222 few months back.
      So, is it good to hold for some more time or sell?
      Or do you suggest adding more?
      I am looking for making some profit (10-20% more from current levels) in next 1-2 months.

      Please suggest.

      Regards,
      Narendra

      Delete

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