Stock Pick From Finance & Heavy Electrical Equipment Sector

PNB Gilts

PNB Gilts is the only listed primary dealer in the government securities that also enjoys a major market share. The company offers treasury bills, Central government dated securities, state government securities, PSU bonds, inter-corporate deposits, CSGL accounts, money market instruments, mutual fund distribution and investment/trading in equity and equity derivatives. After the demonetisation drive, the cash deposited by public is expected to be parked by banks into mutual funds, liquid funds and G-Sec funds. The decline in interest rate cycle may continue in the near term. On the financial front, PNB Gilts revenue increased 69.7 per cent to Rs 175 crore in Q2FY17, as compared to the same period in previous fiscal. The company’s net profit soared three times to Rs 70.14 crore in Q2FY17 on a yearly basis. On the valuation front, the company’s share price is trading at a PE multiple of 8.2x with book value of Rs 45.62.

Crompton Greaves

Crompton Greaves (CGL) is engaged in the business of power transformers and reactors, low tension motors and switchgears. Its segments include power systems, industrial systems and automation systems. CGL has received a binding offer for acquisition of its B2B automation business from Alfanar. The company’s offer, comprising of ZIV Aplicaciones y Technologies, S.L. (Spain), its subsidiaries along with the related automation business in UK, Ireland, France and India, is valued at an enterprise value of Rs 870 crore from Alfanar. The company expects the completion of the acquisition by Alfanar by January 31, 2017. CGL will utilise funds from the deal to hive off the debt. It will focus on its core operations in India which provides significant growth opportunity, besides enhancing shareholder value. On the financial front, CGL’s topline increased 35.45 per cent to Rs 1043 crore in Q2FY17 on a yearly basis. The company’s bottomline too rose more than two-fold to Rs 38.27 crore in Q2FY17 on a yearly basis. We expect the company to continue to put up robust financials. The company will declare its Q2FY17 results on December 7.