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I n f l ows r o b u s t , r e s u l t s t a d b e l ow e x p e c t a t i o n s
Kalpataru Power Transmission (KPTL) reported a disappointing set of
Q1FY12 numbers due to muted execution. Standalone revenue growth at
9% YoY was way below our expectations of 15% YoY growth. Tepid
execution and higher input costs pulled down EBITDA margins at 11.4%
vs. our estimate of 12%. Low execution coupled with a rise in borrowing
costs dented PAT growth as it declined 9% YoY to | 34 crore (I-direct
estimate: | 36 crore). We expect the growth for KPTL to be back ended as
order inflows in last couple of quarters will lead to execution growth.
ƒ Visibility improves incrementally with book to bill at 2x
KPTL won orders worth | 1500 crore, which mainly came in from
international market and SEBs. Therefore, robust order flows led to an
order backlog of | 5900 crore as of Q1FY12, up 23% YoY. Hence, the
book to bill ratio of 2x provides enough room for reasonable growth in
FY12E. Out of the overall backlog, the transmission segment occupies
85% of the overall backlog. Though revenue growth in Q1FY12 was hit by
early onset of monsoon and some client based delays, we expect revenue
CAGR of 17% over FY11-FY13E. Margins at 11.4% were below
expectations as a rise in raw material costs and other operating expenses
impacted margins.
ƒ Subsidiary performance to aid robust performance in FY12
JMC (the infrastructure subsidiary) reported a 44% YoY and 47% YoY
jump in revenues and PAT in Q1FY12, respectively. After a lull in FY10,
JMC witnessed robust order flows of | 900 crore. JMC has an order
backlog of | 4700 crore. The management expects 30-35% growth in
revenues in FY12E. Shubham Logistics reported | 25 crore of revenues in
Q1FY12 coupled with EBITDA of 14-15% and expects to clock | 170-190
crore (margins of 14-15%) in FY12E.
V a l u a t i o n
At the CMP of | 127, KPTL is trading at inexpensive valuations of 9.1x and
7.9x its FY12E and FY13E EPS, respectively. With growth expected to be
back ended, we expect revenues and PAT to grow at a CAGR of 17% and
15% over FY11-FY13E, respectively. We retain our earlier BUY rating and
target price of | 147 on the stock
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
I n f l ows r o b u s t , r e s u l t s t a d b e l ow e x p e c t a t i o n s
Kalpataru Power Transmission (KPTL) reported a disappointing set of
Q1FY12 numbers due to muted execution. Standalone revenue growth at
9% YoY was way below our expectations of 15% YoY growth. Tepid
execution and higher input costs pulled down EBITDA margins at 11.4%
vs. our estimate of 12%. Low execution coupled with a rise in borrowing
costs dented PAT growth as it declined 9% YoY to | 34 crore (I-direct
estimate: | 36 crore). We expect the growth for KPTL to be back ended as
order inflows in last couple of quarters will lead to execution growth.
ƒ Visibility improves incrementally with book to bill at 2x
KPTL won orders worth | 1500 crore, which mainly came in from
international market and SEBs. Therefore, robust order flows led to an
order backlog of | 5900 crore as of Q1FY12, up 23% YoY. Hence, the
book to bill ratio of 2x provides enough room for reasonable growth in
FY12E. Out of the overall backlog, the transmission segment occupies
85% of the overall backlog. Though revenue growth in Q1FY12 was hit by
early onset of monsoon and some client based delays, we expect revenue
CAGR of 17% over FY11-FY13E. Margins at 11.4% were below
expectations as a rise in raw material costs and other operating expenses
impacted margins.
ƒ Subsidiary performance to aid robust performance in FY12
JMC (the infrastructure subsidiary) reported a 44% YoY and 47% YoY
jump in revenues and PAT in Q1FY12, respectively. After a lull in FY10,
JMC witnessed robust order flows of | 900 crore. JMC has an order
backlog of | 4700 crore. The management expects 30-35% growth in
revenues in FY12E. Shubham Logistics reported | 25 crore of revenues in
Q1FY12 coupled with EBITDA of 14-15% and expects to clock | 170-190
crore (margins of 14-15%) in FY12E.
V a l u a t i o n
At the CMP of | 127, KPTL is trading at inexpensive valuations of 9.1x and
7.9x its FY12E and FY13E EPS, respectively. With growth expected to be
back ended, we expect revenues and PAT to grow at a CAGR of 17% and
15% over FY11-FY13E, respectively. We retain our earlier BUY rating and
target price of | 147 on the stock
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