Why BUY Crompton Greaves?
• International business to sustain growth: There are concerns about the company’s ability to sustain growth momentum in the international business. We believe Pauwels and Ganz have strong presence in their respective markets and will be able to grow at a reasonable pace. • Best placed in the fast-growing 765 KV market: Crompton Greaves is the first Indian company to receive orders for 765 KV transformers. The segment is expected to grow rapidly (demand to go up to 50,000 MVA in the 11th Five Year Plan). This will ensure the company maintains strong domestic market growth. • Acquisitions in the areas of automation will likely propel growth further and provide the trigger to re-rate the stock. We have assigned different PE-multiples to domestic & international operations due to different risk profiles. We value domestic business at 23.5x FY11E earnings, at 20% discount to our Siemens target PE(CMP:Rs695, BUY). Target PE for international business assignes to 20% discount to domestic ope
