Transformers & Rectifiers- Good show despite pressures in transformer sector:Emkay

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Transformers & Rectifiers

Good show despite pressures in transformer sector

BUY

CMP: Rs253                                        Target Price: Rs352

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n     TRIL’s Q1 performance (rev - Rs1.4bn, PAT - Rs77mn) is better than est due to (1) significantly higher volumes (98% gr.) and (2) high margin export revenues of Rs322mn vs Rs27mn yoy

n     Positives not yet factored (1) JV with ZTG & L1 in eight 765kv transformers (Rs1.2bn), (2) almost on schedule delivery of 1200kv in Q211E & (3) successful deliveries & performance of 400kv and exp. qualification in PGCIL/NTPC orders

n     We reiterate that TRIL is quickly entering into big league of transformer mfrs (CG, ABB, Areva and Siemens) with a capacity to deliver across ranges though only transformers

n     Some pain left on lower entry prices and ambiguity on sector fundamentals but TRIL better placed with exports and specialized transformers. Expect gradual re-rating; Buy