Kalpataru Power - Margin to Recover; Order Intake Spurt Vital; Result Update Q2FY15 :: Edelweiss, PDF link

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Kalpataru Power’s (KPP) Q2FY15 revenue surged a robust 18%, beating ours and consensus’ 10% estimate. This was led by strong execution in the transmission & distribution (T&D) segment in the exports market. However, margin fell 40bps YoY to 9.1% due to sustained losses in the infra business (INR125mn loss) and 90bps dip in the T&D business, which is an aberration. While order intake jumped ~50% to INR9.2bn, order book continued to slip (down 17% YoY). KPP is L1 in INR16bn orders, which it expects to be awarded over the next 2 quarters. While the company has revised down FY15 revenue guidance of 15% to 12-15%, it maintained order intake and EBITDA margin guidance of INR40-50bn and 10%. Factoring in higher depreciation and tax rate, we cut FY15 and FY16 standalone estimates 8% and 5%, respectively.

Robust revenue growth; H2 order intake likely to be strong

KPP’s revenue surged 18% led by robust international T&D execution. Interest cost fell 10% YoY due to INR120mn forex loss in Q2FY14. Order book dipped 17% YoY to INR55bn. The company expects significant order intake traction and intake in H2FY15 to be ~INR30bn. It also expects margin to improve in H2FY15.

JMC revenue weak; logistics business falters

JMC Projects’ (JMC) revenue declined 5% YoY in Q2FY15 due to weak traction across projects. Revenue growth is likely to remain muted in FY15. The company had earlier issued FY15 revenue growth guidance of 5-10%. Margin improved 130bps YoY to 6.2% as a result of lower construction expenses. Management expects 100bps margin expansion over the next 6 quarters. Shree Shubham Logistics’ revenue dipped 15% due to rationalisation of operations in the trading business. However, growth is expected to be back on track in H2FY15.

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https://www.edelweiss.in/research/Kalpataru-Power--Margin-to-Recover;-Order-Intake-Spurt-Vital;-Result-Update-Q2FY15/27531.html