Stalwart Advisors

Listing settles@Rs135 & Open Offer@104. Rating changed to "HOLD"

Crompton Greaves Consumer Electricals got listed today at NSE & BSE. Post the auction session, CGCEL settled at Rs 129 and is currently frozen at upper circuit of Rs 135 with only buyers.

Though the scrip will be in trade-to-trade mode for 10 days, volumes today have been decent at 83 lac shares traded on both exchanges put together and a value of Rs 108 Cr.

At current price of Rs 135, the stock trades at 34 times its FY17E EPS of Rs4. The valuations are now almost at par with Havells, a leader in premium offerings, which trades at ~35 times FY17E earnings.

Mandatory Open Offer by Acquirer
Acquirer has announced an open offer to acquire upto 16.3 Cr shares i.e. 26% of the outstanding equity at a price of Rs 104; this is 11.2% higher than Rs 93.5 which they had originally paid for acquiring 34.37% stake in CGCEL from Avantha Group. (http://www.bseindia.com/corporates/anndet_new.aspx?newsid=244bf9a3-a4b2-4eb8-9922-6bd34183dd87)

For now, this has set a floor price for the stock.

Any price below Rs120 is a good entry point. Wait for a correction before buying / adding.


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