Shares of Crompton Greaves Consumer Electricals Ltd surged as much as 5 percent on Friday as CLSA maintained an outperform rating on the stock at a target price of Rs 290, hoping for sustainable growth moving forward.

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Crompton Greaves quoted at Rs 251.35 per share, up 2.07 percent on BSE at 12.44 pm. The stock touched the day's high at Rs 258.30, after opening at Rs 248.15. It had settled at Rs 246.25 on Friday.

The brokerage firm expects the company's margin to rebound with efforts on cost optimisation. CLSA said Crompton Greave's new category growth in the first half of the current fiscal offers hope for growth visibility.

The brokerage firm estimates the earnings per share to grow at a compounded annual rate of 17 percent over 2019-22.

The company's net cash balance sheet and free cash flow generation may help it to undertake inorganic acquisition, it added in its research note.

Crompton Greaves reported a 4 percent year-on-year growth in the quarter ended September 30, 2019. The total income for the quarter came in at Rs 1,075.8 crore.

So far this year, the mid-cap consumer electronics company posted over 5 percent returns, while the last one-year return was more than 11 percent. Crompton Greaves gave over 54.2 percent returns in the last three years, slightly higher than Sensex return of 54 percent.

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First Published:Jan 17, 2020 2:37 PM IST