Buy Crompton Greaves, target Rs 127: Nirmal Bang By STAFF REPORTER Nirmal Bang Securities has given a buy recommendation on Crompton Greaves for a target of Rs 127. Crompton Greaves reported consolidated revenue of Rs 3,070 crore for the fourth quarter, exactly in line with estimate, posting a 5.8 per cent YoY revenue growth. However, as seen in the 9MFY12 period, profitability was under severe pressure as consolidated EBITDA/PAT fell 42.9 per cent/60.1 per cent YoY to Rs 210 crore/Rs 100 crore, respectively. EBITDA/PAT was 16.6 per cent/31.2 per cent below estimates. "Consequently, we revise downwards our FY13 earnings estimates by 15.3 per cent. On the positive side, operating margin grew 90bps sequentially, while order inflow was better than expected at Rs 2,900 crore. After a 630 bps YoY decline in operating margin in FY12, from 13.4 per cent to 7.1 per cent, we expect recovery in margins in FY13/14E across business segments driven by cost rationalisation and improving product realisation. We believe the erosion of margins in FY12 is priced in and the stock trades at an attractive valuation considering likely 34.8 per cent earnings CAGR over FY12-14E, albeit on a low base. We introduce FY14 financials and upgrade the stock from sell to buy with a target price of Rs 127 (from Rs 108 earlier) based on 12 times FY14E EPS," the brokerage said. (Disclaimer: All information provided on moneyguruindia.com pertaining to investing, stocks, securities must be understood as information and not investment advice. We advise all readers to seek advice from a professional investment adviser before making any investment decisions on the basis of any of our content. All reports, analysis, columns, statements or listings featured in the site are not meant to be solicitation or recommendation to buy, sell, or hold securities. We are merely providing information.) -------------------------------------------------------------------------------- VISIT THIS SPACE FOR DAILY STOCK RECOS --------------------------------------------------------------------------------