Stock Recommendations For Your Portfolio

CROMPTON GREAVES | BSE CODE: 500093 | VOLUME: 418872 | CMP: Rs.207 

As per the expectations of the street and the experts, Crompton Greaves holds high potential, given the prospective turnaround in the investment cycle, with higher focus on the power transmission and distribution sector. It also has a strong presence in domestic consumer products which is expected to witness high growth. This can be attributed to the better brand leverage that the company enjoys coupled with better distribution network and demand for its products. The power system business in the USA and the subsidiaries in Canada are still not out of the woods, but the overall performance of the international subsidiaries are likely to improve backed by a recovery in the European business that was hit by a restructuring exercise. A reversal in the outlook for domestic demand would improve sentiment too. A sharp improvement in its margins, earnings and return ratios would be the key drivers of a re-rating.

Gabriel India is all set to reap the benefits of strong growth in the two-wheeler segment and revival in the passenger and CV segments. The management is believed to be focusing on increasing the revenue share from after-sales and exports, which are high margin segments. Gabriel’s revenue share from Honda’s two-wheeler business is also expected to increase as the latter starts to ramp-up production at its new Karnataka facility. No major capex and strong free cash flow generation would help reduce debt burden going forward. Consequently, it would lead to higher margins and return ratios. Given the fact that it has strong market share across business verticals and the improving outlook of the CV/PV segments backed by recent restructuring exercise to concentrate on each of the business verticals to improve the product-mix and increase revenue share from after-sales and exports, all of these factors would lead to better financial performance.