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Exports and aftermarket success continues

Our view

Triveni Turbine (TRIV) reported yet another robust print albeit a tad below expectations. Revenue growth of 32% YoY was broad-based with both domestic and export revenue growth coming in strong at 27% YoY and 37% YoY respectively. Export and aftermarket continue to gain incremental share in the overall revenue pie driving strong gross margin expansion. Despite that, EBITDA margin have remained range-bound as other expenses eat away increased revenue share on account of increased sub-contracting and travel charges. Order Inflows moderated for exports on a high base while domestic business saw strong pick-up.

Looking Forward

Management highlighted a strong growth of 33% YoY in the enquiry book in H1FY24 driven by increased domestic enquiries (+100% YoY). Enquiries have remained strong from Cement, Steel and distillery sectors in the domestic market. The company intends to increase the aftermarket business by offering higher value services such as automation and increased refurbishment. Also, in addition to servicing its own product base, the company is positioning itself to cater to third party turbines by catering to the market not serviced by the OEMs currently. Energy transition theme continues to be the key underlying theme where demand remains strong for efficiency enhancement and renewable energy transition. We have maintained our EPS estimates building in revenue/EPS CAGR of 30%/34% respectively. Also, retain ADD with a target price of Rs441 based on 40x FY25E earnings.

Result Highlights

* Consol sales came in at ~Rs3.88bn (up 32% YoY) (vs YSLe Rs4.3bn).

* Gross margin has continued its YoY expansion journey (last 5 quarters have seen GM improve YoY), stood at 49.1% (+240bps YoY). This was in line with estimates.

* A lower-than-expected revenue led to lower than expected operating leverage benefits. EBITDA Margin still saw an expansion of 20bps YoY to 19.2% with an EBITDA growth of 33% YoY to Rs743mn.

* PBT grew by 35% YoY to Rs830mn while PAT came in at Rs642mn, up 39% YoY driven by revenue growth and stable operating performance.

* Order inflow came in at Rs4.6bn (+27% YoY) with Orderbook at Rs14.8bn (+30% YoY).

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