Greaves Cotton Ltd (GCL): BUY

Greaves Cotton Ltd (GCL)

CMP Rs335, BUY

Target price Rs435, Upside 29.9%


ä       Infrastructure equipment business to drive growth


ä       New initiatives to boost power engine revenues


ä       Acquisition and new product launch to tackle Piaggio insourcing


Trading at 9.5x FY09E earnings - Value BUY

GCL is currently trading at 9.5x FY09E earnings of Rs35.7 and 5.8x FY09E EV/EBITDA. These valuations are attractive, given the company's earnings CAGR of 19% over FY07-09E, strong ROCE (more than 40%) and discount to its peer group. Furthermore, strong internal accruals over the past two years have substantially increased GCL's tangible networth. These, combined with debt reduction initiatives, have significantly reduced gearing over the last two years. We recommend Buy with a target price of Rs435, representing potential upside of 30% from the current levels.


Click below for the detailed report on Greaves Cotton Ltd (GCL).



Warm Regards,


India Infoline Research Team


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