investors eye

stock update

Triveni Turbines

Reco: Buy

Stock Update

Growth on track; maintain Buy

Key points

Company details
Price target:

Rs145

Market cap:

Rs3,794 cr

52-week high/low:

CMP: Rs115

Rs152/82

NSE volume:
(No of shares)

73,900

BSE code:

533655

NSE code:

TRITURBINE

Sharekhan code:

TRITURBINE

Free float:
(No of shares)

9.9 cr

Shareholding pattern

Flat quarter due to lumpy order booking in FY2015: For Q1FY2016, Triveni
Turbines Ltd (TTL) reported a flattish quarter with a mere 2.2% Y-o-Y growth in
revenue. This is mainly due to the lumpiness in order booking towards H2FY2015.
The company expects its order execution to pick up from Q2FY2016 onwards.
Due to a higher share of product orders and initial business development
expenses for overseas business, the OPM fell to 16.3% from 18.2% in Q1FY2016.
Overall, PAT rose by 1% YoY supported by higher other income (led by a foreign
currency gain).
Robust order booking during the quarter: In Q1FY2016, TTL reported an order
intake of Rs181 crore (up 23% YoY) taking the stand-alone order book to Rs665
crore (up 10% YoY). The consolidated order book stood flattish at Rs779 crore.
Its joint venture with GE did not have any order finalisation during Q1FY2016
but expects to bag five orders in Q2FY2016 itself. Based on the successful
commissioning of its first overseas order, the company expects its order intake
to further pick up from H2FY2016. On the back of a strong order book and bids
in pipeline, the management is expecting a robust growth in FY2016 as well.
Maintain Buy with a PT of Rs145: We continue to like the stock for its strong
competitive positioning, international marketing efforts, robust order backlog
and margin profile, shorter execution cycle and healthy balance sheet (it is a
debt-free company with superior return ratios). We have fine-tuned our earnings
estimates in view of its latest annual report and now we are expecting a CAGR
of 40% over FY2015-17. The stock is currently trading at 20.9x its FY2017E
earnings. We feel that the pick-up in execution from Q2FY2016 onwards will
drive the required growth for FY2016. We maintain our Buy rating on the stock
with an unchanged price target of Rs145 (at 26x its FY2017E EPS).

Price chart

Results

Rs cr

Particulars

Price performance
(%)

1m

3m

6m 12m

Absolute -14.0

-0.6

-9.6

31.4

Relative -14.6
to Sensex

-4.5

-7.3

20.6

Operational income
Total expenditure
Operating profit
Other income
EBIDTA
Interest
Depreciation
PBT
Tax
Adjusted PAT
Extraordinary items
Reported PAT
Ratio (%)
Operating margin
PAT margin
Tax rate

Sharekhan

10

Q1FY16

Q1FY15

YoY %

Q4FY15

QoQ %

123.7
103.6
20.2
4.6
24.8
0.1
3.5
21.1
6.8
14.4

2.2
4.6
-8.4
37.3
-2.4
-8.3
-13.1
-0.3
-3.0
1.0

14.4

121.1
99.1
22.0
3.4
25.4
0.1
4.1
21.2
7.0
14.2
14.2

195.5
161.6
34.0
16.3
50.3
0.4
2.5
47.3
15.2
32.2
(2.8)
29.4

-36.7
-35.9
-40.6
-71.8
-50.8
-73.8
40.1
-55.4
-55.4
-55.4
-100.0
-51.1

16.3
11.6
32.0

18.2
11.7
32.9

August 17, 2015

1.0

17.4
16.5
32.0

Home

Next

investors eye

stock update

Valuations (consolidated)
Particulars
Net sales (Rs cr)
Y-o-Y growth (%)
Net profit (Rs cr)
Adjusted EPS (Rs)
Y-o-Y growth (%)
PER (x)
P/B (x)
EV/EBIDTA (x)
RoCE (%)
RoNW (%)

FY13
665.3
5.3
104.7
3.2
15.0
36.2
27.4
22.3
190.5
151.5

FY14
517.9
-22.2
70.5
2.1
-32.7
53.8
21.7
32.5
55.7
45.1

FY15
650.8
25.6
93.3
2.8
32.3
40.6
16.6
24.2
59.2
46.3

Consumption of RM
as % of sales
Incr/decr in stock
as % of sales
Raw material cost
as % of sales
Employee expenses
as % of sales
Other expenses
as % of sales

Q1
FY16
73.9
60
(6.9)
-6
67.0
54
19.5
15.8
17.1
14

Q1
FY15
62.0
51
8.8
7
70.8
58
17.5
14.5
10.8
9

YoY
%
19.1
-178.0
-5.4
11.4
58.9
-

Total expenditure

103.6

99.1

4.6

Expenditure analysis
Particulars

JV has started showing execution: The revenue from its

joint venture (JV) GE Triveni in Q1FY2016 stood at Rs41
crore as compared with Rs69.4 crore reported in entire
FY2015. The JV has already turnaround in FY2015
reporting a profit after tax (PAT) of Rs5.4 crore. Its current
order worth of Rs167 crore is to be executed in FY2016
itself in accordance with deliveries scheduled to the
Philippines, Indonesia and Vietnam. Based on the
successful commissioning of its first overseas order, the
company expects order intake to pick up from H2FY2016
onwards. It is expecting to win five international bids in
Q2FY2016 itself. The management also indicated that due
to their cost optimisation efforts, they have remained
competitive with the European and Japanese rivals in spite
of a substantial fall in euro and yen in the last one year.
Domestically, the company expects the order finalisation
to speed up in the coming quarters.

FY16E FY17E
947.8 1,287.4
45.6
35.8
138.8
181.8
4.2
5.5
48.7
31.0
27.3
20.9
10.3
6.9
15.0
10.9
65.7
58.1
46.6
39.7

(Rs cr)
Q4
QoQ
FY15
%
117.5
-37.2
60
(0.6) 1,084.5
0
117.0
-42.7
60
14.4
35.3
7.4
30.2
-43.3
15
161.6

GE venture at a glance
Particulars
Net sales

Rs cr
FY12 FY13 FY14
0.0

19.2

Y-o-Y growth (%)

69.4

190.0

352.0

13.3

218.9

173.7

85.3

20

22

PBT margin (%)

PBT
Provision for taxation

-35.9

-3.2

-2.1

-2.4

4.0

38.0

77.4

0.0

0.0

0.0

1.4

11.4

25.6

-34.9

30

33

Tax rate

Strong order booking during the quarter: The stand-alone order

inflow remained strong at Rs181 crore (up 23% YoY and 1%
sequentially) with the high-margin after-market (AM) segment
accounting for 22% of the orders and exports accounting for 56%
of the orders. The stand-alone order book stood at Rs665 crore
with about 10% contribution from the AM segment. The share of
exports in the stand-alone order book went over 41%. On the
domestic front, the order booking in up to 30MW showed some
improvement, specifically from the sugar & agro-based industries
and from some specific process co-generation segments. The
consolidated order book stood flattish at Rs779 crore of which
Rs167 crore of orders were from GE Triveni.

FY15 FY16E FY17E

21.8

PAT before minority

interest

-3.2

-2.1

-2.4

5.4

26.6

51.9

Minority interest

-1.6

-1.1

-1.2

2.7

13.3

25.9

PAT after minority

interest

-1.6

-1.1

-1.2

2.7

13.3

25.9

Y-o-Y growth (%)

NM

394.0

95.1

PAT margin (%)

-5.5

-5.4

3.9

7.0

7.4

40

180

70

210

273

95

258

95

160

20.8 179.0

200.0

220.0

141.0

Order inflow during the year

Execution rate (%)
Order book at the end

Estimates fine-tuned; earnings forecast remains largely

unchanged: We have fine-tuned our estimates in view of
FY2015 annual report. While Q1FY2016 saw margin pressure
owing to other expenses and low-margin product orders
driven revenue, we feel in the coming quarters the company
would be again realising 22-23% level margins owing to its
growing high-margin AM segment. Overall, our earnings
estimates have remained largely the same for FY2016 and
FY2017. We are now expecting a compounded annual
growth rate (CAGR) of 40.7% in its revenues and that of
39.6% in its earnings over FY2015-17.

Trends in order booking

Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.

Sharekhan

11

August 17, 2015

Home

Next

Disclaimer
This document has been prepared by Sharekhan Ltd. (SHAREKHAN) and is intended for use only by the person or entity to which it is addressed to. This document may contain confidential and/or privileged material and is not for any type of circulation and any
review, retransmission, or any other use is strictly prohibited. This document is subject to changes without prior notice. This document does not constitute an offer to sell or solicitation for the purchase or sale of any financial instrument or as an official
confirmation of any transaction. Though disseminated to all customers who are due to receive the same, not all customers may receive this report at the same time. SHAREKHAN will not treat recipients as customers by virtue of their receiving this report.
The information contained herein is obtained from publicly available data or other sources believed to be reliable and SHAREKHAN has not independently verified the accuracy and completeness of the said data and hence it should not be relied upon as such.
While we would endeavour to update the information herein on a reasonable basis, SHAREKHAN, its subsidiaries and associated companies, their directors and employees (SHAREKHAN and affiliates) are under no obligation to update or keep the information
current. Also, there may be regulatory, compliance, or other reasons that may prevent SHAREKHAN and affiliates from doing so. This document is prepared for assistance only and is not intended to be and must not alone be taken as the basis for an investment
decision. Recipients of this report should also be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The user assumes the entire risk of any use made of this information. Each recipient
of this document should make such investigations as he deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult his own
advisors to determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. We do not undertake to advise you as to any change of our views. Affiliates of SHAREKHAN may have issued other
reports that are inconsistent with and reach different conclusion from the information presented in this report.
This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to
law, regulation or which would subject SHAREKHAN and affiliates to any registration or licencing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons
in whose possession this document may come are required to inform themselves of and to observe such restriction. Either SHAREKHAN or its affiliates or its directors or employees/representatives/clients or their relatives may have position(s), make market, act
as principal or engage in transactions of purchase or sell of securities, from time to time or may be materially interested in any of the securities or related securities referred to in this report and they may have used the information set forth herein before
publication. SHAREKHAN may from time to time solicit from, or perform investment banking, or other services for, any company mentioned herein. Without limiting any of the foregoing, in no event shall SHAREKHAN, any of its affiliates or any third party involved
in, or related to, computing or compiling the information have any liability for any damages of any kind. The analyst certifies that all of the views expressed in this document accurately reflect his or her personal views about the subject company or companies
and its or their securities and do not necessarily reflect those of SHAREKHAN. Further, no part of the analysts compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this document.
Compliance Officer: Ms. Namita Amod Godbole; Tel: 022-6115000; e-mail: compliance@sharekhan.com Contact: myaccount@sharekhan.com

Sharekhan

December 26, 2014

Home

Next