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CD Equisearch
Triveni Turbine (Accumulate)
CMP: 122.20
Target: ₹143
Stunning progress of Triveni Turbine’s after market business over the years owes much to its relentless focus on refurbishing large sized turbines, introducing spares for efficiency improvement packages and foraying in utility segment. After market exports would gain traction with setting up of subsidiaries in UK and West Asia and service centres in South East Asia and Africa. More new service centres are planned in diverse locations to buoy after market revenues share - 23.3 per cent in 9MFY17 compared to 21.9 per cent in the same period a year ago.
The stock currently trades at 31.2x FY17e EPS of ₹3.95 and 25.8x FY18e EPS of ₹4.78. Owing to lackadaisical domestic steam turbine market valuation metrics have not totally toed past trends — P/E shrunk to 29.4x by end of FY16 from 45.9x a year back to reflect temperance in earnings growth (15.9 per cent versus 35.8 per cent). But now with domestic markets on the mend and exports looking up with Green Earth Translogistics Pvt Ltd’s commissioning of large sized turbines internationally and remarkable focus on after market, earnings growth would gradually rise. Enquiries have gained traction with nearly 9.5GW of potential orders Its domestic market share (for up to 30MW) of nearly 60 per cent symbolizes market depth and adept execution. Yet further slowdown in export order booking — already down over a third so far this fiscal — would chip away dominance of the overseas market.
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