Buy Kalpataru Power Transmission -In line with estimates; Anand Rathi

Please Share:: India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��


Kalpataru Power Transmission
In line with estimates; maintain Buy
Kalpataru and its subsidiary JMC Projects reported healthy
3QFY11 results. The order pipeline (PowerGrid and state) is
robust. We expect orders of `13bn in 4QFY11 and an order book
of `54bn by Mar’11. We maintain our Buy, with a target of `198.

 Revenue growth in line with expectations. Net sales grew
10.3% yoy to `7.9bn, 2.5% more than we expected. Revenue was
marginally lower, by `200m-250m, owing to execution delays in
Algeria (unrest in neighbouring countries) and extended
monsoons in the home market.
 Order book and inflows. The order book, at `50bn, was flat yoy,
1.9x FY10 sales. Orders were +`7bn in 3Q. The transmission
segment constituted 90% of the order book. Nearly 75-80% of the
unexecuted orders have a price-variation clause. The consolidated
order book was `93bn including JMC’s order book of `43bn.
 Operating profits and earnings. EBITDA grew 12.7% yoy to
`926m. The margin rose 25bps yoy, to 11.7%. Net profit grew
15.2% yoy, to `508m, 9.6% more than estimated, chiefly due to
higher ‘other income’ of `116m: carbon credits (`30m), subsidiary
dividend (`20m) and treasury income (`66m).
 Valuation and Risks. We reiterate our positive view on the stock
and maintain our target of `198: standalone business at `183,
based on 14x FY12e earnings, and `14.7 for JMC Projects. Key
risks: keener competition and rising interest and commodity costs.