Hold Triveni Turbine Ltd For Target Rs.615 by Prabhudas Liladhar Capital Ltd
Muted Q1, back ended recovery in H2FY27
We revised our EPS estimates by -12.1%/-3.6% for FY27E/28E, factoring in lower margins due to adverse order mix and delayed export dispatches, and a slower recovery in domestic order finalisation. Triveni Turbine (TRIV) reported a challenging Q1FY27, with revenue growth of 19.2% YoY to Rs4.4bn, while EBITDA margin declined sharply to 11.6%, reflecting an adverse order mix, higher domestic execution and delayed export dispatches amid 3–4x increase in freight rates. Order inflow grew a modest 6.1% YoY to Rs5.7bn, despite strong export (+53.4%) and aftermarket (+54%) traction, as domestic and product orders declined 35.4% and 11.6%, respectively. Order book stood at Rs21.8bn, up 5.1% YoY, but near-term execution remains vulnerable to geopolitical disruptions and customer-led delivery deferrals. Domestic enquiry generation has softened across industries, with longer order finalisation cycles, while North Africa, Middle East and South regions also remain weak. Export opportunities remain healthier across the US, Southeast Asia and Europe, although US enquiry conversion takes >12 months, limiting near-term contribution. Aftermarket remains a key growth driver, led by refurbishment and utility/gas turbine opportunities, but US operations continue to incur losses and are expected to break even only during FY27. The strategic NTPC CO? storage project, with ~Rs1.8bn pending execution, is being delivered at near-zero margins and will continue to weigh on profitability through Q2/Q3. While management expects FY27 revenue and profitability growth to be back-ended, sustained margin recovery remains dependent on a better order mix and normalization of export execution. Overall, elevated quarterly volatility, domestic demand softness, delayed export conversions, low-margin strategic execution and geopolitical uncertainty are likely to keep the earnings recovery gradual. The stock is trading at a P/E of 48.7x/37.1x on FY27/28E EPS. We maintain our rating to ‘Hold’ valuing the stock at a PE of 38x Mar’28E (same as earlier) arriving at a TP of Rs615 (Rs638 earlier).
While we remain cautious on the near-term outlook given slower order finalizations amid geopolitical uncertainties however, its long-term prospects continue to remain strong due to
1) a healthy enquiry pipeline across markets
2) growing share of higher margin exports & aftermarket sales
3) strong traction in both industrial & API drive turbines
4) a robust order book with strong inflows across businesses.
Gross margin contraction impacted profitability:
Consolidated revenue increased by 19.2% YoY to Rs4.4bn (PLe: Rs4.3bn) driven by healthy growth in domestic sales (+27.4% YoY to Rs2.4bn) and Export sales (+11% YoY to Rs2bn). Product sales increased by ~19% YoY to Rs3bn and Aftermarket sales increased by ~19.5% YoY to Rs1.4bn. Gross margin saw a sharp contraction of 961bps YoY to 42.6%. EBITDA declined by 30.3% YoY to Rs513mn (Ple: Rs743mn). EBITDA margin contracted by 823bps YoY to 11.6% (Ple:17.1%) primarily due to unfavourable mix, price escalation and certain ongoing strategic order (NTPC). PBT decreased by 20.1% YoY to Rs697mn (Ple: Rs888mn) despite increase in other income (+27.9% YoY to Rs284mn). Adj.PAT declined by 20.8% YoY to Rs511mn (PLe: Rs662mn) while effective tax rate remains at 26.7% (vs 26.1% YoY).
Strong order book of Rs21.8bn:
Order inflow for the quarter increased by 6% YoY to Rs5.7bn, driven by export momentum (+53.4% YoY to ~Rs3.8bn), while domestic orders declined 35.4% YoY to ~Rs1.8bn amid global uncertainties. Product orders decreased by 11.5% YoY to Rs3.4bn while Aftermarket orders increased by 53.4% YoY to ~Rs2.2bn driven by contract wins in the geothermal and utility segments and continued traction in refurbishment and performance optimization solutions. Order book stands at Rs21.8bn with a domestic/export mix of 43%/57% (vs 44%/56% in Q1FY26) and a Product/Aftermarket mix of 71%/29% (vs 86%/14% in Q1FY26).
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