Emkay

Greaves Cotton (Buy)

CMP: Rs 77.35

Target: Rs 90

The three-wheeler goods carrier has better economics than four-wheeler goods carrier, both on ownership costs and operating costs. Only Tata Ace Zip is comparable to three-wheeler; Case exists for three-wheeler goods carrier cannibalisation by Tata Ace Zip, both fitted with Greaves engine. Greaves Cotton to regain volume growth momentum in near-term, led by 1) favourable base in three-wheeler; and 2) ramp-up in supply to Tata Motors. Our earnings estimates of Rs 6/ share and Rs 7/ share for FY13E and FY14E have upside bias.

(This article was published on December 10, 2012)
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