Crompton Greaves

Crompton Greaves is a decently well known name for mid sized electrical equipment like transformers, motors, etc. The company has shown consistent growth in last 10 years since it started expanding outside India. Yes, there have been some bad acquisitions, but still on average a good performance across the board.

Here's the IV calculation:

1. Graham's Hidden Bond Value of Rs 69

2. Historical P/E based balue of Rs 115

3. Modified Graham's Number based value of Rs 122

4. There has been a sharp decline in EPS for last few quarters owing to slowdown across the globe, and hence a depressed Earning Power Value (assuming 2% growth in future) of Rs 48

5. Half PEG fair value of Rs 48, taking part 5 years growth rate of 8%.

Assuming 30% Margin of Safety, the fair price comes at Rs 56. However, this is quite depressed a value due to recent performance being hampered due to slowdown, but we expect this will improve to a good extent in future, and considering the huge potential in India for infrastructure development, the market conditions will considerably improve in future.

However, I admit that my purchase price of Rs 129 has been quite high for Crompton Greaves, and there's risk of further fall in prices. Moreover, Crompton Greaves is 12.3% of my portfolio (its concentrated, 10 stocks in total, top 4 stocks constitute 50% and top 6 constitute 75%, and the primary reason is that I believe I can't manage more than 10 stock portfolio...) at current market prices.

However, I believe in the business model and capabilities of the management, and most importantly, in the irrational behaviour of Mr. Market participants, and the fact that I have time with me. I'll slowly reduce my exposure during the next bull phase of market and when everything starts rising as if it were the best investment.

Here's the history of my trades in Crompton Greaves stock. Yes, I've bought at high prices when I was euphoric that I know so much, when i actually did not!