IndiaMidcaps

VISITNOTE

TRIVENITURBINE
Exportsmarket,akeygrowthdriver
IndiaEquityResearch|EngineeringandCapitalGoods

WemetMr.NikhilSawhney,ViceChairmanandMDofTriveniTurbines
(TTL) to understand the prevailing domestic industry trend and its
strategy in the exports market. Management remained upbeat on the
exports market potential led by biomass and other renewable sectors.
ManagementindicatedTTLremainsextremelycompetitiveintheglobal
arenaevenaftersignificantdepreciationintheEuroandYen,owingtoits
valueengineeringandefficientsupplychain.Whilebroadercapexinthe
domesticmarketremainselusive,managementexpectsdomesticmarket
(~700MWinFY15)toimproveby1015%inFY16,albeitonlowbaseled
byagroprocessingandprocesscogenerationindustries.Itmaintainedits
FY16 revenue guidance of ~24%, implying significant ramp up in
executionin9mFY16(impliedgrowth~30%).Whilebroadbasedrecovery
is still a few quarters away, TTLs sharpening focus on exports and
geographicalfootprintexpansioncontinue togain momentum, instilling
confidenceofrobustorderbookinginensuingquarters.MaintainBUY.

Exportsmarketcontinuestogaintraction,domesticyettorecover
TTL is clocking strong traction, particularly in Europe and SEA markets. Renewable
space (waste to energy and biomass) is expected to drive international orders. The
company expects strong order booking in ensuing quarters, led by water to energy
orders. In domestic market, it is witnessing some traction at SME level in food, agro
processingandprocesscogenerationindustries.Therearesomeactiveenquiriesinthe
cementspacetoo.TTLisconfidentofmaintainingits~60%marketshare.

Internationalisationofaftersalesbusiness,akeyfocusarea
Thecompanyhasbeensettingupservicecentresoverseastoincreaseexportsafter
salesbusinessandistargetingSouthAfrica,IndonesiaandSouthEastAsiaandpartsof
Europeanmarkets.Ofoverallaftermarketrevenues,nowinternationalforms~30%.

EDELWEISSRATINGS
AbsoluteRating

BUY

InvestmentCharacteristics

None

MARKETDATA(R:TRVT.BO,B:TRIVIN)
CMP

: INR106

TargetPrice

: INR125

52weekrange(INR)

: 152/83

Shareinissue(mn)

: 330.0

Mcap(INRbn/USDmn)

: 35/626

Avg.DailyVol.BSE/NSE(000) : 180.8
SHAREHOLDINGPATTERN(%)
Current Q4FY15
Promoters*
MF's,FI's&BKs

70.0
4.7

70.0
5.1

FII's

18.6

18.4

17.7

Others

6.7

6.9

7.3

NIL

BSEMidcap
Stock
Index

Stockover
Index

*Promoterspledgedshares
(%ofshareinissue)

PRICEPERFORMANCE(%)

1month

(6.8)

(10.2)

(3.4)

3months

2.2

1.0

(1.2)

12months

15.6

23.1

7.5

Outlookandvaluations:Positive;maintainBUY

We believe the companys strong product advantage in small turbines, further

bolsteredbyGEsbrandingintheinternationalmarket,significantlybrightensgrowth
prospectsovernext23years.MaintainBUYwithTPofINR125.

Financials(Consolidated)
YeartoMarch

Netrevenues(INRmn)
EBITDA(INRmn)
Margins(%)
Reportedprofit(INRmn)
Dilutedshares(mn)
EPS(INR)
P/E(x)
ROAE(%)

FY14
5,154
1,036
20.1
656
330
2.0
53.3
40.0

FY15
6,508
1,225
18.8
959
330
2.9
36.5
47.6

FY16E
8,655
1,790
20.7
1,224
330
3.7
28.6
45.9

EdelweissResearchisalsoavailableonwww.edelresearch.com,
BloombergEDEL<GO>,ThomsonFirstCall,ReutersandFactset.

FY17E
10,984
2,398
21.8
1,600

330
4.9
21.9
44.2

Q3FY15

70.0
4.7

SwarnimMaheshwari
+912240407418
swarnim.maheshwari@edelweissfin.com

AmitMahawar
+912240407451
amit.mahawar@edelweissfin.com

September4,2015
EdelweissSecuritiesLimited

EngineeringandCapitalGoods

GEJVsneartermvisibilityremainsrobust;orderintakecritical
GE JVs current order book stands at INR1.6bn, which is expected to be fully executed in
FY16. The company is hopeful of good order booking over the next 2 quarters, based on
currentnegotiationswithcustomers.ThekeyfocusareasoftheGEJVareIPPs(coalbased),
sugarcogeneration,fertiliser,oil&gasandcombinedcycleplants.

EdelweissSecuritiesLimited

TriveniTurbine

CompanyDescription
TTL came in to existence in October 2010 when Triveni Engineers Industries demerged its
steamturbinesbusinessintoTTL.Theturbinesbusinesswasstartedin1970.Thecompanyis
primarily in the manufacture and sale of customised 030MW steam turbines for clients
across the captive market. It also manufactures and supplies spare parts of its steam
turbines as well as provides aftermarket services to clients to complement its product
portfolio. These aftermarket services include spare parts sales, refurbishment solutions,
contractualservicesandvariousothersoperationsandmaintenancesolutions.TTLentered
into a JV (its share: 50%+1) with GE in April 2010 to undertake the manufacture and
marketingofsteamturbinesinthe30100MWrange.

InvestmentTheme
Sound positioning in domestic market; captive market to revive : With 40 years of
experience in the manufacture and sale of turbines, TTL commands more than 60% of
marketshareinthe030MWsteamturbinessegmentinIndia.Withtheeconomicscenario
improving,corporatecapexrevivalisexpectedtopickupinensuingquarters.Further,with
thenewcapacityadditionsonthecards,IndiaInc.,isputtinggreaterthrustonrenewable
energy.ThisaugurswellforTTLgivenitsdominantpresenceinthedomesticmarket.

Penetration in exports market to be next big growth driver : The overall international
market in the sub30MW range is pegged at ~INR140bn. TTLs market share was ~1% in
FY14.Whiletheenquirybookfromtheinternationalmarketsteadilygrowing,orderinflow
is also following suit. The companys current order book enquiry position stands at
4,000MW(inthe030MWrange),whichhasdoubledfrom2,000MWinFY11.

GETriveni to swell product range; sizeable business to come from FY15: With TTLs entry
into 30100MW range turbines, we expect bigticket orders to lend fillip to sluggish sales
growth(6%CAGRduringpastfiveyears).TTL,onstandalonebasis,toowouldbenefitasit
willbemanufacturingtheproductsfortheJV.WeexpecttheJVtolog200%CAGRinsales
over FY1416 on a very low base from the exports market following increased ordering
exposure in key geographies like US, MENA, Europe and Africa. Domestic market is also
expectedtoremainhealthy.

KeyRisks
Industrialcapexslowdownmayleadtodeclineinorderinflow:
General economic slowdown leading to contraction in industrial growth may result in
cancellationordefermentofcapexspend,whichwouldadverselyimpactorderinflowsfor
thecapitalgoodssector.AnyslowdowninorderinflowsforTTLcanhavesignificantimpact
onthecompanystoplinegrowth.

Rising competition may contract TTLs market share and hence margin : Though TTL
commands major market share in the segment it operates in, one cannot rule out
competition from the Chinese or other MNC players. Increasing competition will put
pressureonthecompanysmarginperformance.

EdelweissSecuritiesLimited

EngineeringandCapitalGoods

FinancialStatements(Consolidated)

KeyAssumptions

YeartoMarch

FY14 FY15 FY16E FY17E

Macro

GDP(YoY%)
Inflation(Avg)

6.9
9.5

7.4
5.9

8.0
5.0

8.7
5.0

Reporate(exitrate)

8.0

7.5

6.8

6.5

60.5 61.2

64.5

65.0

USD/INR(Avg)
Company

Domesticmktorder.inMW(030W)

725.0 690.0 759.0 986.7

Triveni'sdomesticmarketshare(%)

65.0 60.0

ExportsMarketordering(INRbn)

62.0

62.0

133.9 127.2 133.5 140.2

Triveni'sexportmarketshare(%)

1.1

Incomestatement

YeartoMarch

FY14

FY15

FY16E

(INRmn)
FY17E

Incomefromoperations
Directcosts

5,154
2,838

6,508
3,829

8,655
5,117

10,984
6,576

Employeecosts

579

622

697

781

OtherExpenses

701

832

1,051

1,229

Totaloperatingexpenses

4,118

5,282

6,865

8,586

EBITDA

1,036

1,225

1,790

2,398

Depreciationandamortisation

135

158

193

209

EBIT

900

1,068

1,597

2,189

Add:Otherincome

108

341

143

216

12

18

16

17

(28)

997

1,363

1,724

2,388
740

2.3

2.6

3.1

Less:InterestExpense

A)Domesticproductsales

(23.4) (20.0)

27.4

23.7

Add:Exceptionalitems

B)ExportsproductsalesRevenuegrowth

(17.2) 80.0

30.2

22.9

ProfitBeforeTax

C)AftermarketsalesRevenuegrowthbusiness

(13.0) 27.7

30.0

30.0

Less:ProvisionforTax

329

431

534

D)GETsalesRevenuegrowthbusinesswise(%)

582.5

46.0

Less:MinorityInterest

(12)

27

34

48

A)DomesticproductsalesOrderinflowgrowth
B)ExportsproductsalesOrderinflowgrowth
C)AftermarketsalesOrderinflowgrowth
D)GETsalesOrderinflowgrowthverticalwise
Taxrate(%)

26.3 (31.8)

34.5

30.0

ReportedProfit

656

959

1,224

1,600

(33.5) 95.3

18.5

25.2

AdjustedProfit

656

959

1,224

1,600

(8.7) 37.1

25.0

28.0

No.ofSharesoutstanding(mn)

330

330

330

330

(61.1) 100.0

50.0

AdjustedBasicEPS

2.0

2.9

3.7

4.9

31.0

31.0

No.ofDilutedsharesoutstanding

330

330

330

330

33.0 31.6

Excisedutyasa%ofsales

2.9

2.5

2.5

2.5

DilutedEPS(INR)

2.0

2.9

3.7

4.9

Depreciationas%ofgrossblock

6.0

7.1

7.0

7.0

AdjustedCashEPS

2.4

3.4

4.3

5.5

Dividendpershare(DPS)

0.8

0.9

1.1

1.2

Commonsizemetrics

YeartoMarch

FY14

FY15

FY16E

FY17E

Operatingexpenses
EBITDAmargins

79.9
20.1

81.2
18.8

79.3
20.7

78.2
21.8

EBITmargins

17.5

16.4

18.4

19.9

NetProfitmargins

12.5

15.1

14.5

15.0

Growthratios(%)

YeartoMarch

FY14

FY15

FY16E

FY17E

Revenues
EBITDA

(22.3)
(35.6)

26.3
18.3

33.0
46.1

26.9
34.0

AdjustedProfit

(35.9)

46.2

27.6

30.7

EdelweissSecuritiesLimited

TriveniTurbine
Balancesheet

Cashflowmetrics

Ason31stMarch

FY14

FY15

FY16E

(INRmn)
FY17E

YeartoMarch

FY14

FY15

FY16E

FY17E

Sharecapital
Reserves&Surplus

329
1,418

329
1,956

329
2,697

329
3,846

Operatingcashflow
Investingcashflow

375
(447)

706
(343)

903
(260)

1,315
(260)

Shareholders'funds

Financingcashflow

(136)

(373)

(409)

(447)

NetcashFlow

(208)

(11)

235

608

Capex

(532)

(111)

(260)

(260)

Dividendpaid

(292)

(309)

(414)

(451)

1,747

2,285

3,026

4,175

MinorityInterest

41

68

102

150

Shorttermborrowings

69

Longtermborrowings

119

123

144

165

TotalBorrowings

188

129

150

171

LongTermLiabilities&Provisions

42

45

45

45

Profitabilityandefficiencyratios

DeferredTaxLiability(net)

96

77

77

77

YeartoMarch

FY14

FY15

FY16E

FY17E

Sourcesoffunds

2,114

2,604

3,401

4,618

GrossBlock
NetBlock

1,895
1,020

2,246
1,482

2,718
1,505

2,938
1,520

ReturnonAverageEquity(ROAE)
PretaxReturnonCapital

40.0
59.0

47.6
63.2

45.9
60.4

44.2
61.9

InventoryDays

115

117

113

116

92

93

96

93

DebtorsDays

81

73

72

74

193

61

101

141

PayableDays

161

128

110

111

1,305

1,636

1,703

1,754

CashConversionCycle

35

63

76

78

92

337

571

1,179

CurrentRatio

1.3

1.3

1.5

1.7

Inventories

1,116

1,349

1,823

2,342

Fixedassetturnover(x)

4.5

4.8

5.4

6.8

SundryDebtors

1,126

1,483

1,951

2,475

GrossDebt/EBITDA

0.2

0.1

0.1

0.1

Loans&Advances

748

666

688

728

GrossDebt/Equity

0.1

0.1

OtherCurrentAssets

570

306

336

387

AdjustedDebt/Equity

0.1

0.1

TotalCurrentAssets(excash)

3,560

3,803

4,798

5,931

76.3

61.0

99.5

128.7

Sundrycreditorsandothers

1,357

1,325

1,753

2,252

Provisions

1,486

1,847

1,919

1,995

Operatingratios

TotalCurrentLiabilities&

2,843

3,172

3,672

4,247

YeartoMarch

FY14

FY15

FY16E

FY17E

717

632

1,126

1,684

2,114

2,604

3,401

4,618

TotalAssetTurnover
FixedAssetTurnover

2.5
4.5

2.8
4.8

2.9
5.4

2.7
6.8

5.3

6.9

9.2

12.7

EquityTurnover

3.2

3.1

3.2

2.9

Capitalworkinprogress
IntangibleAssets
TotalFixedAssets
Cashandcashequivalents

NetCurrentAssets(excash)
Usesoffunds

InterestCoverageRatio

BookValuepershare(INR)

Freecashflow

Valuationparameters

YeartoMarch

FY14

FY15

FY16E

FY17E

YeartoMarch

FY14

FY15

FY16E

FY17E

656
135

959
158

1,224
193

1,600
209

AdjustedDilutedEPS(INR)
YoYgrowth(%)

2.0
(35.9)

2.9
46.2

3.7
27.6

4.9
30.7

ReportedProfit
Add:Depreciation
Interest(NetofTax)

(INRmn)

12

11

12

AdjustedCashEPS(INR)

2.4

3.4

4.3

5.5

31

(93)

(30)

53

DilutedPricetoEarningsRatio

53.3

36.5

28.6

21.9

Less:ChangesinWC

456

330

495

558

PricetoBookRatio(P/B)(x)

20.0

15.3

11.6

8.4

Operatingcashflow

375

706

903

1,315

EnterpriseValue/Sales(x)

6.8

5.4

4.0

3.1

Less:Capex

532

111

260

260

(158)

596

643

1,055

33.9
0.7

28.4
0.8

19.4
1.0

14.2
1.1

Others

FreeCashFlow

EnterpriseValue/EBITDA(x)
DividendYield(%)

Peercomparisonvaluation

Marketcap

Name

DilutedPricetoEarnings

PricetoBookRatio

ReturnonAverageEquity

(INRmn)

FY16E

FY17E

FY16E

FY17E

FY16E

FY17E

34,970

28.6

21.9

11.6

8.4

45.9

44.2

9,410

55.8

15.5

1.9

1.7

3.4

11.5

11,1899

33.5

22.5

4.7

4.0

13.8

18.4

Median

33.5

21.9

4.7

4.0

13.8

18.4

AVERAGE

39.3

20.0

6.0

4.7

21.0

24.7

TriveniTurbine
TDPowerSystems
Thermax

Source:Edelweissresearch

EdelweissSecuritiesLimited

EngineeringandCapitalGoods

AdditionalData
DirectorsData
Mr.DhruvM.Sawhney
Mr.TarunSawhney
Lt.Gen.(Retd.)K.K.Hazari
Mr.ShekharDatta

Chairman&ManagingDirector
Director
Director
Director

Mr.NikhilSawhney
Mr.ArunMote
Mr.AmalGanguli

Vicechairman&ManagingDirector
ExecutiveDirector
Director

AuditorsJCBhalla&Co.
*asperlastavailabledata

HoldingTop10
Perc.Holding
10.8
4.4
1.3
0.2
0.2

Nalandaequityfund
AmansaCapital
SBIMF
Templetonfund
UTIAM

RelaiceCapitalAM
PrudentialICICIAM
DSPBlackrockMF
DimensionEquity
TaurusMF

Perc.Holding
5.3
2.2
0.7
0.2
0.1

BulkDeals
Data

Acquired/Seller

NoDataAvailable

B/S

QtyTraded

Price

*asperlastavailabledata

InsiderTrades
ReportingData

NoDataAvailable

Acquired/Seller

B/S

QtyTraded

*asperlastavailabledata

EdelweissSecuritiesLimited

TriveniTurbine
EdelweissSecuritiesLimited,EdelweissHouse,offC.S.T.Road,Kalina,Mumbai400098.
Board:(9122)40094400,Email:research@edelweissfin.com
NiravSheth
HeadResearch
nirav.sheth@edelweissfin.com

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Researchanalysthasservedasanofficer,directororemployeeofsubjectCompany:No
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Researchanalystorhis/herrelativehasactual/beneficialownershipof1%ormoresecuritiesofthesubjectcompanyattheendof
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theirchargesofnonregistrationasabrokerdealer.
Agraphofdailyclosingpricesofthesecuritiesisalsoavailableatwww.nseindia.com
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