Reliance Securities
Kalpataru Power (Buy)
CMP: ₹378
Target: ₹544
Kalpataru Power Transmission is a diversified EPC player involved in execution of power transmission and pipeline projects. It also undertakes buildings, roads and power plant construction projects through its subsidiary JMC Projects.
Kalpataru Power’s standalone order book stood at ₹14,200 crore as of 2Q FY19 end; order inflow in H1 FY19 stood at ₹4,740 crore up 48 per cent with L1 in excess of ₹2,000 crore. Kalpataru Power Transmission has delivered a strong performance in 2QFY19 led by better-than-expected execution in railway, oil & gas pipeline and T&D business.
At subsidiary level, JMC’s revenue continue to grow owing to improved project execution. Moreover, Shree Shubham Logistics reported strong growth in revenue. Looking ahead, we expect KPTL to be one of the key beneficiaries of strong transmission capex in both domestic and global markets, which would drive 21 per cent CAGR in earnings through FY18- 20E.