IIFL Institutional Equities, a part of the IIFL Group, one of the leading players in the Indian financial services space, recommends “Sell” Crompton Greaves.
According to IIFL Institutional Equities report, management commentary alleviated some concerns on the domestic power systems business. Nonetheless, adjusting for production disruption, segment margins are still on a downtrend.
Sluggish order intake would only exacerbate margin pressures. Issues in overseas subsidiaries are more widespread than just the Belgian facility. The rest of the foreign business is also struggling to remain profitable.
Although the worst of losses may be behind with the Mechelen restructuring, margins would remain under pressure across markets. We cut FY14-FY15 EPS estimates by 22% and 17% respectively. Maintain SELL, the brokerage added.
The report was published by IIFL’s Institutional Equities Research desk.