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Exports on strong footing

TRIV’s 1QFY25 results exceeded our expectations on all parameters. The company reported revenue/EBITDA/PAT growth of 23%/35%/32% YoY. Persistent weakness and the impact of elections resulted in muted 2% YoY growth in domestic order inflows, whereas export order inflows surged 74% YoY. While we expect exports to improve further going ahead as the US foray ramps up, the domestic order inflow pipeline will see a gradual pickup in ensuing quarters given a strong enquiry pipeline from key enduser industries. We tweak our estimates to factor in lower domestic revenues and roll forward our valuation. We maintain our BUY rating with a TP of INR720, based on 48x Jun’26E EPS.

Beat across all parameters

Revenue grew 23% YoY to INR4.6b, fueled by strong execution of the order book. Domestic/export revenue growth stood at 27%/19% YoY. Gross margin expanded ~40bp YoY to 51.8%, while EBITDA margin was up ~180bp YoY to 20.6%, aided by operating leverage benefits. Accordingly, EBITDA grew 35% YoY/6% QoQ to INR956m. PBT at INR1.1b grew 37% YoY, supported by higher other income (+45% YoY). PAT rose 32% YoY, despite a higher effective tax rate (25.4% vs. 22.5% in 1QFY24). Order inflow came in at a record INR6.4b, up 40% YoY, largely propelled by export order bookings (+74% YoY), while domestic orders inched up 2% YoY. Total order book stood at INR17.2b (+23% YoY).

Pipeline shaping up well across geographies

For the past few quarters, domestic ordering has been weak due to finalization delays from key end-user industries. Stable commodity prices too have affected demand as rising prices prompt companies to add capacity. Further, companies had adopted a wait-and-watch mode in light of elections and union budget. However, TRIV is confident of an uptick, as improving enquiries from several sectors, such as steel, cement, waste-to-energy, renewable, plastic, paper, etc., are expected to translate into orders. The outlook for exports continues to be strong across key geographies such as Europe, SE Asia, Middle East, US, etc. for both products (industrial and API turbines) and aftermarket (refurbishment, spares, services). Notably, TRIV is expanding its offerings by foraying into service of utility and geothermal turbines. It has also bagged an order for API turbines from the Middle East, underscoring the increasing acceptability of its products.

Current order book mix provides margin stability

TRIV’s current order book is skewed toward exports and aftermarket, which have a superior margin profile. This, coupled with stable commodity prices, provides better predictability in input costs, ensuring a stable margin trajectory. Even though the scale-up in the US market in the refurbishment and aftermarket categories will necessitate upfront costs, it will not have any material margin impact in the long run.

Investment geared toward R&D and personnel

Despite a robust cash balance, the company would prefer to maintain its asset-light model, with incremental investments being channeled toward R&D, so as to innovate newer products and solutions such as 120MW turbines, sCO2, tCO2 based solutions. In line with its comprehensive IP strategy, the company has secured a substantial number of IP rights globally, with 374 global IPR filings as of 1QFY25. With its focus on capitalizing on aftermarket opportunities in the US and other geographies, TRIV would increase its employee base, which has doubled from FY22 levels.

We expect a PAT CAGR of 30% over FY24-27

We tweak our estimates to factor in lower domestic ordering and consequently, revenues, with a slight downward margin revision to account for higher employee costs. We expect TRIV’s revenue/EBITDA/PAT to clock a CAGR of 29%/30%/30% over FY24-27. Backed by a comfortable negative working capital cycle, strong margins, and low capex requirements, we expect its OCF and FCF to report a CAGR of 37% and 40% over the same period, respectively.

Valuation and view

The stock is currently trading at 45x/34x FY26E/FY27E EPS. We marginally revise our estimates and roll forward our TP to Jun’26E EPS. We maintain our TP of INR720 based on 48x Jun’26E EPS. Key risks to our recommendation would come from slower-than-expected order inflow growth (particularly in domestic markets), lowerthan-expected margins, and a slowdown in global geographies.

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