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Rising export order to aid FY25 outlook...

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.

* TTL reported in-line Q4FY24 revenue growth of 24% YoY, led by superior execution in the Product segment (42% YoY) and higher sales from the domestic market.

* EBITDA margin improved by 1670bps YoY to 19.6%, due to favourable product mix & moderation in other expenses.

* The order book grew by 17% YoY, supported by 51% YoY growth in export orders in FY24. Robust growth in order booking with an improvement in export contribution (52% mix) provides visibility for both revenue and profitability for FY25.

* The total production capacity of TTL is currently at 250+, and the current capacity utilization is at 75%.

* We remain positive on the stock due to TTL’s focus on renewable, waste to heat recovery and healthy margins which will drive growth in FY25. We therefore revise our rating to BUY and value the stock at a P/E of 48x on FY26E EPS with a TP of Rs. 679.

Execution to pick up…

In Q4FY24, TTL’s revenue grew by 24%YoY to Rs. 458cr, which is in line with our estimate, due to strong execution in the product segment (42% YoY to Rs 314cr). The export revenue during the quarter increased by 33.4% YoY to Rs 238cr, while the domestic topline grew by 15% YoY to Rs. 220cr. Due to increasing visibility in international orders, the management has increased the workforce by 19% YoY in FY24 and is expected to further increase by 20-25% in FY25. Gross margin declined by 134bps YoY to 50.5% in Q4FY24 due to increase in subcontracting expenses, while the EBITDA margin increased by 167bps YoY to 19.6%. With the given prospects in the international market, we expect execution to pick up pace in the coming years.

Strong order book...

In FY24, the order book grew by 17% YoY to Rs. 1,552cr (which is 1x FY24 revenue), aided by 51.1% YoY growth in export order inflow in FY24. The domestic order inflow in Q4FY24 declined by 34% YoY to Rs176cr, due to a delay in the finalization of the order on account of the election. The mix of export order books increased to 52% in FY24 compared to 42% in FY23, which will support the margin and profitability in FY25-FY26. The management guided that the expectations for medium-term business performance remain robust, supported by a substantial backlog of orders in renewable, API and IPG (Industrial Power Generation) turbines, along with a strong inquiry pipeline. We expect the order book to grow at a CAGR of 17% over FY24-FY26 aided by strong traction in the international market and government thrust over infra spending.

Valuations

The increasing share of the export order book would aid profitability in the coming quarters. We expect the product business to continue to witness healthy traction, while an increasing share of the aftermarket mix will drive revenue growth. Therefore, we revise our rating to BUY and value the stock at a P/E of 48x on FY26E EPS with a TP of Rs 679.

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