Dalal Street Investments

Lehman on Crompton Greaves

November 30, 2007

Lehman Brothers equity research has initiated coverage on Crompton Greaves with an OVERWEIGHT rating and an EqualWeight rating on ABB India Ltd.

Crompton Greaves Ltd: CGL
Large investments in the Indian power transmission and distribution (T&D) sector will likely drive impressive earnings growth for CGL over the next five years. CGL is among the five largest power T&D equipment manufacturers in India with a presence across product categories. The company will likely benefit from large opportunities in the Indian power T&D sector, where we estimate a market of INR1870 bn over the next five years.

European acquisitions [Ganz Transelektro and Microsol Holdings] have plugged the gaps in CGL’s product portfolio and have given the company access to the growing European and North American markets. Apart from high-voltage direct current (HVDC) technology, CGL now has access to a full suite of T & D products and services. CGL has an unexecuted order book of INR70 bn.

CGL is expected to report a PAT of Rs 548 crore for FY08 and RS 682 crore for FY09. Lehman has set a one year price target of Rs 500 on the stock.


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