Triveni Turbine - Management Meet Update - Nirmal Bang

We had a meeting with the management of Triveni Turbine (TTL) recently to get the latest business update. The management expects exports to be a key growth driver, while it is also upbeat on scale-up of the GE-TTL joint venture (JV) for 30-100MW turbines. Following are the key takeaways:

Exports to be key growth driver: TTL is witnessing a revival in order finalisation activity in its key export markets of South East Asia and Europe, which was muted last year. In 1QFY15, TTL reported its highest-ever quarterly export order inflow of Rs870mn, while it is on course to register a similar level of export order inflow in 2QFY15. Consequently, total export order inflow in FY14 of Rs1.5bn may be surpassed in 1HFY15 itself. The profitability in export markets continues to remain very strong as TTL has a healthy pricing advantage over global competitors. With a rising share of exports as a percentage of sales (29% of FY14 revenue), it will aid margins positively. TTL also remains very strict about payment terms in export markets and refuses to accept an order without getting the advance from its customer and a Letter of Credit.

Revival in demand from end-user industries: Bio-mass and non-conventional energy sources like waste heat recovery and municipal solid waste are key drivers of demand in Europe. In South East Asia, captive power plants and metals segment have witnessed healthy order finalisation. Healthy demand is also witnessed from agri-based industries like sugar (Thailand and Vietnam) and palm oil (Indonesia and Malaysia). TTL is also in the initial stage of penetrating Latin American and African continents. It has participated in many trade fairs, built rapport with various local project consultants, generated a lot of product enquiries and also received initial orders from some countries in both these continents. Initial focus in the Latin America continent is on countries like Mexico, Chile, Honduras, Nicaragua, Peru, Guatemala etc, while in the African continent it is focusing on South Africa, Kenya, Mozambique etc, located in southern and eastern areas, which are strong sugar-producing belts.

GE-TTL JV ramp-up: FY14 was a year of significant ramp-up for the GE-TTL JV, as it won orders for five turbines totaling 225MW (worth Rs1.8bn) versus 35MW/80MW orders received in FY12/FY13, respectively. The JV has won orders for four international turbines so far and it expects the ramp-up to continue. Having already commissioned domestic turbines under the JV, its pre-qualification criteria will get a further boost because of: (a) Its first international turbine being scheduled for delivery in FY15, and (b) Securing orders from Philippines and Indonesia by proving to be technically superior in the project evaluation done by Japanese consultants.

Shares of TRIVENI TURBINE LTD. was last trading in BSE at Rs.92.2 as compared to the previous close of Rs. 95.75. The total number of shares traded during the day was 26099 in over 695 trades.

The stock hit an intraday high of Rs. 98.65 and intraday low of 92. The net turnover during the day was Rs. 2442908.

Source : Equity Bulls

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