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http://content.icicidirect.com/mailimages/ICICIdirect_KalpataruPower_Q3FY12.pdf
L o w t o p l i n e , l o w e r b o t t o m l i n e …
Kalpataru Power and Transmission (KPTL) declared a dismal set of
numbers for Q3FY12 with flattish topline growth and de-growth in
bottomline (on a YoY basis). For the standalone business, revenues stood
at | 801 crore, up by a marginal 1.4% YoY. The setback in execution
stemmed from right of way issues and client side delays (in Africa). The
bottomline came in at | 40 crore, down 21% YoY. Higher interest outgo at
| 33.5 crore (up 50% YoY), impacted PAT margins. Though the order
backlog of | 5,500 crore provides reasonable revenue visibility for the
next two years, execution has to pick up for growth.
Reasonable order book but execution concerns remain…
KPTL witnessed order inflow of | 360 crore during the quarter, taking the
total standalone order book to | 5500 crore. This implies a book to bill
ratio of 1.9x. Domestic transmission orders constitute 49% of the total
order book while international transmission orders constitute another
40%. The management expects to end the fiscal year with an order book
of | 6,500 crore. Of the total domestic transmission backlog of | 2700
crore, 47% of orders are from SEBs. Consequently, the net working
capital cycle extended from 120 days in Q3FY11 to 135 days in Q3FY12,
leading to higher interest burden.
JMC Projects (KPTL’s 67% subsidiary) reported healthy revenues at | 573
crore, up 57% YoY. However, EBITDA and PAT margins declined to 7.1%
and 2.1%, respectively, on the back of higher construction and interest
expenses. A strong order backlog of | 5,500 crore provides revenue
visibility for the next three years (on TTM revenues).
V a l u a t i o n
At the CMP of |115, the stock is trading at 10.0x and 8.4x its FY12E and
FY13E EPS, respectively. We believe execution of backlog and new
orders will be key drivers for the stock, going ahead, for a re-rating. We
have valued the stock at 8x its FY13E EPS of | 14, along with a value of
| 13/share from JMC, to arrive at a target price of 124/share. We rate the
stock as HOLD.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
http://content.icicidirect.com/mailimages/ICICIdirect_KalpataruPower_Q3FY12.pdf
L o w t o p l i n e , l o w e r b o t t o m l i n e …
Kalpataru Power and Transmission (KPTL) declared a dismal set of
numbers for Q3FY12 with flattish topline growth and de-growth in
bottomline (on a YoY basis). For the standalone business, revenues stood
at | 801 crore, up by a marginal 1.4% YoY. The setback in execution
stemmed from right of way issues and client side delays (in Africa). The
bottomline came in at | 40 crore, down 21% YoY. Higher interest outgo at
| 33.5 crore (up 50% YoY), impacted PAT margins. Though the order
backlog of | 5,500 crore provides reasonable revenue visibility for the
next two years, execution has to pick up for growth.
Reasonable order book but execution concerns remain…
KPTL witnessed order inflow of | 360 crore during the quarter, taking the
total standalone order book to | 5500 crore. This implies a book to bill
ratio of 1.9x. Domestic transmission orders constitute 49% of the total
order book while international transmission orders constitute another
40%. The management expects to end the fiscal year with an order book
of | 6,500 crore. Of the total domestic transmission backlog of | 2700
crore, 47% of orders are from SEBs. Consequently, the net working
capital cycle extended from 120 days in Q3FY11 to 135 days in Q3FY12,
leading to higher interest burden.
JMC Projects (KPTL’s 67% subsidiary) reported healthy revenues at | 573
crore, up 57% YoY. However, EBITDA and PAT margins declined to 7.1%
and 2.1%, respectively, on the back of higher construction and interest
expenses. A strong order backlog of | 5,500 crore provides revenue
visibility for the next three years (on TTM revenues).
V a l u a t i o n
At the CMP of |115, the stock is trading at 10.0x and 8.4x its FY12E and
FY13E EPS, respectively. We believe execution of backlog and new
orders will be key drivers for the stock, going ahead, for a re-rating. We
have valued the stock at 8x its FY13E EPS of | 14, along with a value of
| 13/share from JMC, to arrive at a target price of 124/share. We rate the
stock as HOLD.
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