Triveni Turbines: Growth On Track Maintain Buy

investors eye
stock update
Triveni Turbines
Reco: Buy
Stock Update
Growth on track; maintain Buy

Key points
Company details
Price target:
Rs145
Market cap:
Rs3,794 cr
52-week high/low:
CMP: Rs115
Rs152/82
NSE volume:
(No of shares)
73,900
BSE code:
533655
NSE code:
TRITURBINE
Sharekhan code:
TRITURBINE
Free float:
(No of shares)
9.9 cr
Shareholding pattern
Flat quarter due to lumpy order booking in FY2015: For Q1FY2016, Triveni
Turbines Ltd (TTL) reported a flattish quarter with a mere 2.2% Y-o-Y growth in
revenue. This is mainly due to the lumpiness in order booking towards H2FY2015.
The company expects its order execution to pick up from Q2FY2016 onwards.
Due to a higher share of product orders and initial business development
expenses for overseas business, the OPM fell to 16.3% from 18.2% in Q1FY2016.
Overall, PAT rose by 1% YoY supported by higher other income (led by a foreign
currency gain).
Robust order booking during the quarter: In Q1FY2016, TTL reported an order
intake of Rs181 crore (up 23% YoY) taking the stand-alone order book to Rs665
crore (up 10% YoY). The consolidated order book stood flattish at Rs779 crore.
Its joint venture with GE did not have any order finalisation during Q1FY2016
but expects to bag five orders in Q2FY2016 itself. Based on the successful
commissioning of its first overseas order, the company expects its order intake
to further pick up from H2FY2016. On the back of a strong order book and bids
in pipeline, the management is expecting a robust growth in FY2016 as well.
Maintain Buy with a PT of Rs145: We continue to like the stock for its strong
competitive positioning, international marketing efforts, robust order backlog
and margin profile, shorter execution cycle and healthy balance sheet (it is a
debt-free company with superior return ratios). We have fine-tuned our earnings
estimates in view of its latest annual report and now we are expecting a CAGR
of 40% over FY2015-17. The stock is currently trading at 20.9x its FY2017E
earnings. We feel that the pick-up in execution from Q2FY2016 onwards will
drive the required growth for FY2016. We maintain our Buy rating on the stock
with an unchanged price target of Rs145 (at 26x its FY2017E EPS).
Price chart
Results
Rs cr
Particulars
Price performance
(%)
1m
3m
6m 12m
Absolute -14.0
-0.6
-9.6
31.4
Relative -14.6
to Sensex
-4.5
-7.3
20.6
Operational income
Total expenditure
Operating profit
Other income
EBIDTA
Interest
Depreciation
PBT
Tax
Adjusted PAT
Extraordinary items
Reported PAT
Ratio (%)
Operating margin
PAT margin
Tax rate
Sharekhan
10
Q1FY16
Q1FY15
YoY %
Q4FY15
QoQ %
123.7
103.6
20.2
4.6
24.8
0.1
3.5
21.1
6.8
14.4
2.2
4.6
-8.4
37.3
-2.4
-8.3
-13.1
-0.3
-3.0
1.0
14.4
121.1
99.1
22.0
3.4
25.4
0.1
4.1
21.2
7.0
14.2
14.2
195.5
161.6
34.0
16.3
50.3
0.4
2.5
47.3
15.2
32.2
(2.8)
29.4
-36.7
-35.9
-40.6
-71.8
-50.8
-73.8
40.1
-55.4
-55.4
-55.4
-100.0
-51.1
16.3
11.6
32.0
18.2
11.7
32.9
August 17, 2015
1.0
17.4
16.5
32.0
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Valuations (consolidated)
Particulars
Net sales (Rs cr)
Y-o-Y growth (%)
Net profit (Rs cr)
Adjusted EPS (Rs)
Y-o-Y growth (%)
PER (x)
P/B (x)
EV/EBIDTA (x)
RoCE (%)
RoNW (%)
FY13
665.3
5.3
104.7
3.2
15.0
36.2
27.4
22.3
190.5
151.5
FY14
517.9
-22.2
70.5
2.1
-32.7
53.8
21.7
32.5
55.7
45.1
FY15
650.8
25.6
93.3
2.8
32.3
40.6
16.6
24.2
59.2
46.3
Consumption of RM
as % of sales
Incr/decr in stock
as % of sales
Raw material cost
as % of sales
Employee expenses
as % of sales
Other expenses
as % of sales
Q1
FY16
73.9
60
(6.9)
-6
67.0
54
19.5
15.8
17.1
14
Q1
FY15
62.0
51
8.8
7
70.8
58
17.5
14.5
10.8
9
YoY
%
19.1
-178.0
-5.4
11.4
58.9
-
Total expenditure
103.6
99.1
4.6
Expenditure analysis
Particulars
JV has started showing execution: The revenue from its

joint venture (JV) GE Triveni in Q1FY2016 stood at Rs41
crore as compared with Rs69.4 crore reported in entire
FY2015. The JV has already turnaround in FY2015
reporting a profit after tax (PAT) of Rs5.4 crore. Its current
order worth of Rs167 crore is to be executed in FY2016
itself in accordance with deliveries scheduled to the
Philippines, Indonesia and Vietnam. Based on the
successful commissioning of its first overseas order, the
company expects order intake to pick up from H2FY2016
onwards. It is expecting to win five international bids in
Q2FY2016 itself. The management also indicated that due
to their cost optimisation efforts, they have remained
competitive with the European and Japanese rivals in spite
of a substantial fall in euro and yen in the last one year.
Domestically, the company expects the order finalisation
to speed up in the coming quarters.
FY16E FY17E
947.8 1,287.4
45.6
35.8
138.8
181.8
4.2
5.5
48.7
31.0
27.3
20.9
10.3
6.9
15.0
10.9
65.7
58.1
46.6
39.7
(Rs cr)
Q4
QoQ
FY15
%
117.5
-37.2
60
(0.6) 1,084.5
0
117.0
-42.7
60
14.4
35.3
7.4
30.2
-43.3
15
161.6
GE venture at a glance
Particulars
Net sales
Rs cr
FY12 FY13 FY14
0.0
19.2
Y-o-Y growth (%)
69.4
190.0
352.0
13.3
218.9
173.7
85.3
20
22
PBT margin (%)

PBT
Provision for taxation
-35.9
-3.2
-2.1
-2.4
4.0
38.0
77.4
0.0
0.0
0.0
1.4
11.4
25.6
-34.9
30
33
Tax rate
Strong order booking during the quarter: The stand-alone order

inflow remained strong at Rs181 crore (up 23% YoY and 1%
sequentially) with the high-margin after-market (AM) segment
accounting for 22% of the orders and exports accounting for 56%
of the orders. The stand-alone order book stood at Rs665 crore
with about 10% contribution from the AM segment. The share of
exports in the stand-alone order book went over 41%. On the
domestic front, the order booking in up to 30MW showed some
improvement, specifically from the sugar & agro-based industries
and from some specific process co-generation segments. The
consolidated order book stood flattish at Rs779 crore of which
Rs167 crore of orders were from GE Triveni.
FY15 FY16E FY17E
21.8
PAT before minority

interest
-3.2
-2.1
-2.4
5.4
26.6
51.9
Minority interest
-1.6
-1.1
-1.2
2.7
13.3
25.9
PAT after minority

interest
-1.6
-1.1
-1.2
2.7
13.3
25.9
Y-o-Y growth (%)
NM
394.0
95.1
PAT margin (%)
-5.5
-5.4
3.9
7.0
7.4
40
180
70
210
273
95
258
95
160
20.8 179.0
200.0
220.0
141.0
Order inflow during the year

Execution rate (%)
Order book at the end
Estimates fine-tuned; earnings forecast remains largely

unchanged: We have fine-tuned our estimates in view of
FY2015 annual report. While Q1FY2016 saw margin pressure
owing to other expenses and low-margin product orders
driven revenue, we feel in the coming quarters the company
would be again realising 22-23% level margins owing to its
growing high-margin AM segment. Overall, our earnings
estimates have remained largely the same for FY2016 and
FY2017. We are now expecting a compounded annual
growth rate (CAGR) of 40.7% in its revenues and that of
39.6% in its earnings over FY2015-17.
Trends in order booking
Sharekhan Limited, its analyst or dependant(s) of the analyst might be holding or having a position in the companies mentioned in the article.
Sharekhan
11
August 17, 2015
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December 26, 2014
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investors eye

Growth on track; maintain Buy

August 17, 2015

JV has started showing execution: The revenue from its

Y-o-Y growth (%)

PBT margin (%)

Strong order booking during the quarter: The stand-alone order

FY15 FY16E FY17E

PAT before minority

PAT after minority

Y-o-Y growth (%)

PAT margin (%)

Order inflow during the year

Estimates fine-tuned; earnings forecast remains largely

Trends in order booking

August 17, 2015

December 26, 2014

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