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ICICI Securities
Kalpataru Power (Buy)
Target: ₹526
CMP: ₹320.50
Kalpataru Power & Transmission has witnessed a strong rebound in execution and order intake post Covid-19 pandemic-related challenges. The company has already won orders worth ₹5,400 crore till December 2020, largely led by international T&D (which was ₹2,300 crore in H1-FY21 ex-Linjemontage) and is L1 in ₹2,000 crore worth orders.
However, the stock has been under pressure due to promoter pledge and issues in the unlisted real estate group entity. In the previous concall in November 20, the promoter had shared the timeline for reduction of pledged shares and the company had reversed a decision in terms of buying of property from related party.
The sale of Alipurduar transmission asset is complete, while the others are in progress. Cash flow from the sale of these assets will aid in debt reduction and we do not foresee any major equity infusion to subsidiaries.
Hence, given benign valuation, healthy near- term order intake and focus on deleveraging, we re-initiate our coverage on the stock with ‘Buy’ rating and a target price of ₹526.
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