IGI Logo

Our recent interaction with Triveni Turbine (TRIV) focused on growth opportunities across domestic and international markets. The company continues to benefit from domestic ordering from steel, cement, and process industries, as well as thermal power, and international ordering too has ramped up in 4QFY26. Beyond 1QFY27, we expect faster finalization of export orders for products and refurbishment. TRIV is also simultaneously working on new technologies and tech tie-ups to enter into newer areas. We tweak our estimates marginally by 1%/2% for FY27/28 and roll forward our TP to Jun’28. Reiterate BUY with a revised TP of INR660 (vs. INR615 earlier).

 Domestic demand broadens across core and new segments

TRIV highlighted a broad-based pickup in domestic demand across steel, cement, and process industries, along with thermal power, where large plants require API-certified, boiler-feed water pumps, opening up a meaningful domestic API opportunity beyond its earlier export linkage. The company continues to see a strong value chain from industrial products to API. Management emphasized that once the prototype is successfully validated and operationalized, it could open up a new avenue of ordering through subsequent tenders. Additionally, management is exploring opportunities in renewable-linked applications and geothermal segments, indicating a gradual diversification in domestic demand beyond traditional industrial capex. We expect domestic inflows to grow at a CAGR of 13% over FY25-28.

Exports to ramp up post 1QFY27, led by refurbishment demand

Management sees a strong opportunity in gas turbine refurbishment globally, especially in markets like the US, where OEMs' capacities are constrained and are focused on manufacturing. The company is exploring partnerships with global players to participate in combined cycle projects by supplying steam turbines alongside third-party gas turbines. It is evaluating potential technology tie-ups to enable its entry into gas turbine manufacturing over time, which can potentially unlock a new growth avenue for the company. Export demand is becoming more geographically diversified beyond the Middle East, with a focus on the US, Mexico, Canada, Southeast Asia, and geothermal markets such as the Philippines, New Zealand, and Australia. While execution saw some delays earlier, management indicated that the inquiry pipeline remains healthy with an expected ramp-up post-1QFY27. We anticipate export inflows to clock a CAGR of 7% over FY25-28.

Expanding portfolio through R&D

TRIV is proactively investing in R&D to undertake new products and new technology initiatives to diversify its portfolio aligned with energy efficiency and decarbonization trends. This includes heat pumps, chillers, steam compressors, and gas expander turbines that use CO? (supercritical and transcritical), air, or hydrocarbons for low-grade heat recovery. The CO?-based heat pumps have crossed 100+ inquiries, with the first order already at the prototype stage and execution planned in FY27. Mechanical Vapor Recompression (MVR) has seen 7-8 orders under execution, gaining strong customer acceptance.

Financial outlook

We tweak our estimates for FY27/28 to factor in slightly better execution. We expect TRIV’s revenue/EBITDA/PAT to clock a CAGR of 12%/12%/12% over FY25-28. Backed by a comfortable negative working capital cycle, strong margins, and low capex requirements, we expect its OCF/FCF to report a CAGR of 45%/51% over the same period.

Valuation and view

The stock currently trades at 42.5x/36.4x on FY27E/28E earnings. We revise our TP to INR660 (from INR615) on a roll forward to 40x Jun’28E earnings. Reiterate BUY.

Key risks

Slowdown in capex initiatives; intensified competition; technology disruption; inability to innovate and launch new products, and geopolitical headwinds resulting in a sharp slowdown in exports and aftermarket segments.

For More Motilal Oswal Securities Ltd Disclaimer
http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html
SEBI Registration number is INH00000041