Crompton Greaves tanks on earning concerns, Citi downgrades stock

Shares in Crompton Greaves dropped as much as 11 percent after the power equipment makers said on Friday net profit dropped 64 percent in the July-September quarter.

Citigroup downgraded the stock to ’neutral’ from ‘buy’ saying earnings were lower than expected due to losses related to the ongoing transfer of production from Belgium to Hungary, and lowered margins in its consumer business.

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Citigroup also cut the target price to Rs 129 from Rs 152, saying Crompton Greaves’ cut in fiscal 2013 guidance hinted at a “bumpy” couple of quarters ahead.

“We now believe margin recovery will likely take longer than previously expected and that CG will remain range bound unless management starts delivering on its stated targets,” Citigroup said in a note dated on Monday.

Crompton Greaves shares were down 8.5 percent at Rs 112.35 in morning trade.

Reuters