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Techno Electric & Engineering (TEEC) reported weak Q3FY12 results. PAT
declined 3%, marginally below our estimate. Energy segment helped the
company post a revenue growth of 11% on the back of power capacity
additions even as EPC (82% of total revenue) was flat during the quarter.
EBITDA improved 40% YoY owing to (1) increased contribution from
Energy and (2) margin expansion seen in EPC. The management seemed
confident of achieving ~10‐15% growth in EPC with margins expected to
normalise to 14%‐15%. In Energy segment, plans are intact to add 100‐
150MW every year. We maintain ‘BUY’ with a target price of INR 312.
Moderate revenue growth, margin expansion continues
TEEC’s Q3FY12 consolidated revenue at INR 1.7bn grew 11% YoY, largely driven by the
wind power capacity addition (YoY) even though the average PLF was lower at ~10%‐
12% (due to seasonal nature) generating 46.4 mn units. Higher contribution from wind
power business helped expand EBITDA margin by 640bps YoY to 30.8% while EBITDA
grew 42% YoY to INR 522mn. Adj. PAT declined 3% YoY to INR 230mn on the back of
higher depreciation and interest expenses as the company added new capacity.
Wind power expansion on track, transmission project completed
TEEC did not add any new capacity during Q3FY12, but maintains that the company is
on track to achieve an annual capacity addition of 100MW‐150MW. It is on track to
commission Phase II of the wind power expansion by 100MW in 2012. The company
achieved a significant landmark, having completed the transmission line project in
Haryana in December 2011 to evacuate 1,320MW power from Jhajjar plant which has a
25‐year concession period. The EPC order book dropped marginally (down 4%) to INR
12bn while inflows were weak at INR 1.4bn.
Outlook and valuations: Positive; maintain ‘BUY’
We like TEEC’s conservative and bottom‐line centric EPC business model. The wind
power and transmission business also provides stability to the overall business. On our
EPS of INR 24.1 and INR 31.2, the stock is currently trading at PE of 10.7x and 8.4x its
FY12E and FY13E respectively. We maintain ‘BUY/ SP’ with target price of INR 312
(earlier INR 300).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Techno Electric & Engineering (TEEC) reported weak Q3FY12 results. PAT
declined 3%, marginally below our estimate. Energy segment helped the
company post a revenue growth of 11% on the back of power capacity
additions even as EPC (82% of total revenue) was flat during the quarter.
EBITDA improved 40% YoY owing to (1) increased contribution from
Energy and (2) margin expansion seen in EPC. The management seemed
confident of achieving ~10‐15% growth in EPC with margins expected to
normalise to 14%‐15%. In Energy segment, plans are intact to add 100‐
150MW every year. We maintain ‘BUY’ with a target price of INR 312.
Moderate revenue growth, margin expansion continues
TEEC’s Q3FY12 consolidated revenue at INR 1.7bn grew 11% YoY, largely driven by the
wind power capacity addition (YoY) even though the average PLF was lower at ~10%‐
12% (due to seasonal nature) generating 46.4 mn units. Higher contribution from wind
power business helped expand EBITDA margin by 640bps YoY to 30.8% while EBITDA
grew 42% YoY to INR 522mn. Adj. PAT declined 3% YoY to INR 230mn on the back of
higher depreciation and interest expenses as the company added new capacity.
Wind power expansion on track, transmission project completed
TEEC did not add any new capacity during Q3FY12, but maintains that the company is
on track to achieve an annual capacity addition of 100MW‐150MW. It is on track to
commission Phase II of the wind power expansion by 100MW in 2012. The company
achieved a significant landmark, having completed the transmission line project in
Haryana in December 2011 to evacuate 1,320MW power from Jhajjar plant which has a
25‐year concession period. The EPC order book dropped marginally (down 4%) to INR
12bn while inflows were weak at INR 1.4bn.
Outlook and valuations: Positive; maintain ‘BUY’
We like TEEC’s conservative and bottom‐line centric EPC business model. The wind
power and transmission business also provides stability to the overall business. On our
EPS of INR 24.1 and INR 31.2, the stock is currently trading at PE of 10.7x and 8.4x its
FY12E and FY13E respectively. We maintain ‘BUY/ SP’ with target price of INR 312
(earlier INR 300).
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