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Order inflow remains the key trigger...

Triveni Turbine Ltd (TTL) is the domestic market leader in steam turbines up to 30 MW. The Company designs and manufactures steam turbines up to 100 MW, and delivers robust, reliable and efficient endto-end solutions

* Q4FY21 revenue grew by 16% YoY supported by 68% YoY increase in domestic business while export business declined by 17% YoY.

* Despite a decline in gross margin by 37bps YoY, EBITDA margin improved by 222bps YoY to 13.8% in Q4 led by higher share of after-market revenue and lower employee cost.

* Order book de-grew by 9% YoY due to 34% fall in international order inflow.

* TTL expects order inflows in FY22 to remain strong led by pent-up demand and strong enquiry pipeline from domestic and export market.

* However, delay in order finalisation, deferment of deliveries due to pandemic and premium valuation to impact near term visibility. Therefore, we revise our rating to Reduce from Accumulate and value the stock at a P/E of 25x on FY22E EPS with a TP of Rs110.

Order inflow remains the key...

FY21 order book declined by 9% YoY to Rs639cr (~1x FY21revenue) due to 19% YoY fall in order inflow. On the international front, order inflow de-grew by 34% YoY to Rs211cr, due to Covid and global travel restrictions. The domestic order inflow declined by 9% YoY to Rs432cr due to localised lockdowns. As per management, the company received order enquiry for process co-generation and waste to heat recovery segment, which is a positive indication for the order finalization in the coming quarters. The domestic order book grew 14% YoY to Rs449cr supported by the food & beverage segment and waste heat recovery segment. In the international market, the thermal renewable segment is still the major growing segment. The company expects some delay with respect to order bookings and execution in H1FY22 due to Covid led restrictions. We expect future order inflows will remain the key trigger for revenue growth in FY22E/ FY23E.

H1FY22 execution is likely to be subdued…

Q4FY21 top-line registered a growth of 16% to Rs179cr (below estimate) supported by 68% YoY increase in domestic business while export business declined by 17% YoY. Revenue from product increased by 18% YoY to Rs125cr due to low base of the previous year while revenue from aftermarket increased by 32% YoY at Rs46cr. In the aftermarket segment, refurbishment has gained good traction both in international and domestic segments. We expect things to improve from H2FY22 due to increasing enquiries from the domestic market, driven by sectors like cement, steel, pharma, waste to heat recovery. We reduce FY22 revenue estimate by 5% on account of tepid execution and delay in order inflows.

Margins improved due to better sales mix...

EBITDA margin during the quarter improved by 222bps YoY to 13.8%, due to a higher share of after-market revenue and cost control initiative. Further employee cost declined by 10% due to realisation of VRS benefit and reduction of manpower. PAT came in at Rs23cr, a growth of 69% YoY. We reduce FY22E EBITDA margin estimate to 19.4% compared to 21% due to an increase in commodity price.

Valuations

The management expects strong order inflows in FY22. However, delay in order finalisation in overseas market and deferment of deliveries due to pandemic cast clouds over near term earnings growth. Therefore, we revise our rating to reduce from Accumulate and value TTL at a P/E of 25x on FY23E EPS with a TP of Rs110.

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