CG Power & Industrial Solutions

What is being posted is from a PMS holding. The Fund house has subsequently exited from this stock.

Can any valued & informed investor share some inputs on this Stock?

" CG Power & Industrial Solutions Ltd. Industry: Industrials Current Market Cap: Rs.5,697 cr.
• CG Power & Industrial Solutions Ltd. (CGPISL) formerly known as Crompton Greaves Ltd, Avantha Group Company. CG is a global pioneering leader in the management and application of electrical energy. CG provides electrical products, systems and services for utilities, power generation and industries. The company is organized into three business groups: Power, Automation and Industrial.
Our Investment Rationale
• For CG Power, the industrial business is expected to outpace the power business in India over the next 2 years, driven mainly by the railways business. It has seen strong traction in ordering from Railways during H1FY18 and expects to clock over INR 10bn in new orders in FY18, ensuring strong revenue growth over FY19 and FY20.
• SEBs on the back of IPDS are picking up on spending and we believe they would drive demand for transformers, mainly in the sub400kV range along with strong growth in the switchgear business where Chinese aren’t present due to requirement of 3 years AMC.
• The international business is led by strong growth in the Indonesian operations. The sale of Hungary and Ireland business is expected to reduce debt to INR 8.5bn by end FY18 and thus improve balance sheet position.
• Financials and Valuation: CG Power trades at 53x FY18 & 21x FY19 P/E & earnings are expected to grow by 16% FY17-20E.
Q3 FY18 financials update
• Revenues for the quarter stood at Rs.1516 cr., a growth of 15% yoy. Growth was driven by better performance of Power Systems (+10%) led by its Indonesian subsidiary.
• The company has received an in principle approval from lending banks in Hungary for the sale of the entity.
• The management was upbeat about the prospects from Railway ordering given the government’s thrust on railway electrification.
• Utilization in Power Systems for transformers stands at 77-78% while that for switchgears stands at 80-85%. For Industrial Systems, the company lets the utilization go as high as 93-94% and manages the mix of orders to maximize profits.
• EBITDA & PAT for the quarter was reported at Rs.127 cr. & Rs.52 cr., a growth of 3% & -36% resp. yoy"


Disc: Invested at Rs 86. Small holding