Triveni Turbine Ltd - Q3 FY14 Result - Quick View - CMP Rs.58, Maintain HOLD - Sushil Finance

TRIVENI TURBINE LTD. - Q3 FY14 RESULT QUICK VIEW - CMP Rs.58, Maintain HOLD

· During Q3 FY14, the company showcased continued impact of the ongoing general economic slowdown. However, as suggested by the Management during the last quarter the order-intake turned healthy in Q3 FY14. In addition, the Management reiterated its statement that the enquiry books continued to remain strong indicating an anticipated quick revival following the trigger in the capex cycle.

The outstanding order book as on December 31, 2013 stood at ~Rs.5,200 mn (doesn't include slow-moving orders); the order intake during the quarter stood at Rs.1.7 bn surpassing the order-booking of Rs.1.4 bn during H1 FY14. The orders booked during the recent quarter included nearly Rs.1.0 bn from international markets and Rs.0.7 bn from the domestic markets. The outstanding order-book consists of 55% orders from domestic markets and 35% orders from export markets while the remaining 10% pertains to after-market services. In the capacity terms, the order intake during H1 FY14 was at 263 MW while during Q3 FY14 the company finalized orders worth 220 MW. The company has bagged some export orders from Indian EPC companies but these orders are domestic market margins. The domestic orders have largely come from process industries, sugar industry and some from steel manufacturers.

The Management stated that the pipeline enquiries which are expected to be closed in Q4 FY14 are quite good and the carry forward order book at the end of FY14 is likely to be healthy. Accordingly, this also indicates a good growth in revenue and profitability in FY15. Meanwhile, during these turbulent times, the company has been focusing on the international markets and has already received some breakthroughs in some of the European countries.

During the quarter, 21% of the top-line consisted of the after-market services revenues; the company is equally focusing on increasing share of revenues from this high-margin business segment. The company is establishing new service centres in the international markets to fulfill this objective.

GE-Triveni Ltd. secured its first international order for the supply of a 38 MW steam turbine to a South East Asian customer. The Management stated that the JV is in the final stages of receiving several more orders, some of which are for even higher capacities, from both domestic and international markets. During the last quarter, the JV had successfully commissioned its first turbine and currently has five turbine for execution in the domestic and international markets.

The company has acquired a 24 acres of land in Peenya Industrial Area of Bengaluru for Rs.400 mn for further capacity expansion. However, the Management has not finalized with any of the plans as of now. The company currently running at capacity utilization of 55-60%. Once the uptick in the capex cycle happens, the increased utilization levels alongwith strong enquiries will result into robust top-line growth.

During our previous update (Q2 FY14 Quick View, dated November 20, 2013) we had recommended a HOLD at the price of Rs.51. We maintain our HOLD rating for the stock on account of current industry-wide slowdown, though, we continue to maintain our positive outlook for the company.

Source : Equity Bulls

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