Accumulate Triveni Turbine Ltd for the Target Rs. 609 By Prabhudas Liladhar Capital Ltd
Quick Pointers:
* Export order inflow declined by ~19% YoY to Rs2.5bn due to delay in order finalization amid tariff related uncertainties.
* Growth in H2FY26 is expected to be backended, with no further inspection delays or execution setbacks anticipated.
We revise our FY27/FY28 EPS estimates by -7.4%/-8.3% accounting for delay in dispatches and slower order conversion amid tariff-related uncertainties. Triveni Turbine (TRIV) reported a muted quarter with revenue remaining largely flat YoY, while EBITDA margin improved marginally by 41bps YoY to 22.6%. In Q2FY26 Domestic revenue declined ~20% YoY due to lower order backlog from the previous year while order inflow surged by 51.7% YoY supported by strong traction across steel, cement, infrastructure, API, and utility turbine segments. Export revenue increased ~27% YoY, aided by strong demand traction from Europe and the Middle East, though order inflows fell ~19% YoY amid tariff-related delays and a subdued US market. The refurbishment segment continues to gain traction in the US and is expected to support near-term growth. The stock is trading at a P/E of 36.1x/32.0x on FY27/28E EPS. We roll forward to Sep’27E and downgrade our rating from ‘BUY’ to “Accumulate’ given slow order finalization, delays in dispatches and softer exports are likely to weigh on performance. We value the business at a PE of 38x Sep’27E (40x Mar’27E earlier) arriving at a TP of Rs609 (Rs650 earlier). Downgrade to “Accumulate”
We remain watchful on TRIV’s short-term challenges regarding delay in dispatches and order finalization delays amid tariffs related uncertainties despite healthy domestic order momentum. 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, and 4) a robust order book with strong inflows across businesses.
Weaker operating performance drags profitability: Consolidated revenue increased by 1.0% YoY to Rs5.1bn (PLe: Rs5.0bn) likely impacted by continued deferment of dispatches amid geopolitical uncertainties. Aftermarket revenue grew ~7.6% YoY to Rs3.3bn while Product revenue declined by ~2.2% YoY to Rs1.8bn. EBITDA grew ~3.0% YoY to Rs1.1bn (Ple: Rs998mn). EBITDA margin expanded by 41bps to 22.6% (PLe: 20.1%), driven by expansion in gross margin (+140bps YoY to 50.7%). Adj. PAT remains flattish YoY to Rs912mn (PLe: Rs855mn) due to weaker operating performance and lower other income (-6.0% YoY to Rs184mn).
Strong order book of Rs22.2bn (1.2x TTM revenue): Order intake rose 14.1% YoY to Rs6.5bn in Q2FY26, led by strong domestic growth (+51.7% YoY to ~Rs4.0bn), while exports declined 19.2% YoY to ~Rs2.5bn. Product and Aftermarket orders intake grew 13.8% and 14.6% YoY, respectively. The order book stood at Rs22.2bn with a higher domestic share (49% vs 39%) and a Product/Aftermarket mix of 86%/14%.?
Conference Call Highlights
? Management guidance: Management cited that the growth in FY26 will be largely backend driven by strong growth anticipated in H2FY26 owing to deferment of dispatches in Q1 which will be spilled over in Q3 and Q4 of FY26.
? Domestic business: After witnessing softness in domestic order inflows during FY25, the company reported a strong rebound in H1FY26 with order inflows rising 42.8% YoY. Management highlighted that this momentum is expected to sustain into H2FY26, supported by a healthy enquiry pipeline and robust traction across key segments such as steel, cement, utility power, process cogeneration, and EPC. With the order inflow momentum remaining strong in FY26, management anticipates healthy growth ahead, driven by execution of these orders.
? Exports business: While export enquiries remained healthy, order inflows declined by ~19.2% YoY, primarily due to tariff-related uncertainties leading to delays in order finalization. Management indicated that ongoing global uncertainties have elongated the enquiry-to-conversion cycle. The company is witnessing some traction from the European market, driven by energy transition initiatives, while the Middle East and Europe continue to be key contributors to the export mix.
? Refurbishment: US market for Refurbishment remains encouraging given health order enquiry with some orders expected to be finalized soon. With no impact of tariffs this segment will drive growth in short term for few quarters in FY26 and FY27. Management cited there are no challenges in execution of order.
? API Turbine: The company has tied up with leading Oil & Gas and EPC players and continues to maintain a strong enquiry pipeline, including repeat orders from several globally reputed refineries. Both domestic and international enquiry momentum remains robust, which is expected to drive growth in the near term.
? Utility Drive Turbine: Triveni’s turbines cater to auxiliary power requirements of large utilities, particularly in the 15–22 MW range, where the overall market size is estimated at 50–55 turbines. The 15–20 MW segment, primarily used for boiler feed water pump applications, presents a strong opportunity. The company is also an approved vendor across major EPCs and NTPC projects, positioning it well to capture demand in this segment.
? New Product
? The company has introduced a new CO2-based heat pump that can produce hot water at 126 degrees, which they claim is the world's first at that temperature. They are seeing good traction and pipeline building for this eco-friendly solution.
? The company has developed an MVR (Mechanical Vapor Recompression) compressor product line, with their first commercial order for 8-9 compressors to be delivered in Q1 of next year
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