Published on 4/09/2019 10:10:59 AM | Source: Prabhudas Lilladher Ltd

Accumulate Triveni Turbine Ltd For The Target Rs.124 - Prabhudas Lilladher

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Strong 1QFY20 numbers, Order backlog declines

Triveni Turbine Ltd (TRIV) reported strong set of numbers with revenue/PAT up 24%/62% YoY, led by pre-ponement of few large orders in the domestic market and 280bps YoY expansion in EBITDA margin (in-line with management guidance). While order inflow (OI) was lower 10% YoY, enquiry pipeline looks encouraging from sectors like molasses based distilleries, pulp paper, process co-generation and steel & cement. Order backlog (OB) was down 7% YoY which management is confident of higher year end number. The company has successfully penetrated its products in new geographies like Middle East, Africa and some parts of South East Asia. We expect Aftermarket segment also to benefit due to presence in newer international geographies. GE Triveni JV registered a total revenue of ~Rs578 mn with a profit after tax of ~ Rs86 mn during the quarter. Management has maintained guidance for double digit revenue growth and expansion in margin in FY20. We have maintained our numbers and expect TRIV to deliver revenue/PAT CAGR of 12/19% over next two years (FY19-21E). The stock is currently trading at 27/23x FY20/FY21E. We maintain Accumulate with TP of Rs124 (28x FY21E).


1QFY20 results beat on all counts: Revenue was up 24% YoY to Rs2.1 bn (PLe Rs1.9 bn), mainly led by 84% YoY growth in domestic market due to preponement of certain deliveries in the domestic market. However, export sales were down 10%YoY due to higher base last year. Product revenue (81% of sales) was up 32% YoY, aftermarket down 1% YoY. EBITDA margin improved 230bps YoY to 21.9% (PLe 19%) mainly due to lower employee cost and other expenses. Interest cost was higher at Rs9.6 mn compared to Rs0.1 mn in 1QFY19. Other income was down 10% YoY at Rs31 mn. Profit share from JV came in higher at Rs35.7 mn against loss of Rs1.1 mn in 1QFY19. Hence PAT for the quarter grew 62% YoY at Rs307 mn (PLe Rs217 mn).


OB declined due to lower OI and strong execution: Order inflow during 1QFY20 fell 10% YoY to Rs2.2 bn with Domestic/Overseas OI down 9%/13% YoY. In the domestic market, OI was lumpy and was impacted due to general elections and ongoing weak conditions. Management indicated strong enquiry pipeline from sectors like molasses based distilleries, pulp paper, process co-generation and steel & cement. With recent biofuel policy and ethanol blending programs, the enquiry levels from ethanol distilleries has been healthy (4-5 per month with 20% conversion ratio). Typically, a 160KLD ethanol facility has ~10-12MW of captive power requirement. Overall OB stands lower at Rs7.2 bn, down 7% YoY, with Product/Aftermarket -9.2%/+9.2% YoY.


GE-TL JV update: GE-TTL JV reported revenue of Rs578 mn and PAT of Rs80 mn against net loss in 1QFY19. OI during the quarter was Rs208 mn and OB stands at Rs920 mn. In June 2019, TRIV filed a petition before National Company Law Tribunal against its JV partner GE alleging misconduct by the latter in the JV between the two and the matter is sub-judice.


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