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Business News/ Money / Crompton Greaves’ power segment remains bright
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Crompton Greaves’ power segment remains bright

Crompton Greaves’ power segment remains bright

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But what is interesting is the confidence of the management about the future. It said that for the company, demand growth in 2009-10 should be in the 18-20% range in the power segment, 12-15% in the consumer segment and 8-9% in the industrial segment. For overseas operations, too, growth in the power segment is expected to remain strong at 12-13%. It pointed out, though, that there was a stagnation in the distribution business and that in Europe, deliveries were not being taken by wind farm developers. The management said the margins for FY09 would be maintained in FY10. Order inflows are expected to be 20% higher than those in FY09.

Operating margins in the company went up 240 basis points in the March quarter compared with the year-ago period. One basis point is one-hundredth of a percentage point.

The management pointed out, though, that monitoring margin movements every quarter is not the right approach in the business because of differences in the product mix and that looking at the annual margin would be more apt.

The company’s industrial systems division, however, has been bearing the brunt of the slowdown and, for the stand-alone company, profits for this division have been flat year-on-year. This division’s order backlog has declined by 8%, as order inflows fell by 3%. The management believes that the slowdown in the segment will continue in the first half of the current fiscal.

The company’s Ganz unit in Europe has now become profitable at the Ebit level. For the consolidated company, the order backlog stands at Rs6,568 crore.

The Crompton Greaves stock had been hurt earlier because of investment in a promoter group company, but there has been a spectacular rerating recently, with the stock up moving up smartly after its results. While the new government is expected to make the power sector its priority, the stock is up a huge 75% in the past month, leaving little room for further gains.

Write to us at marktomarket@livemint.com

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Published: 01 Jun 2009, 10:21 PM IST
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