Triveni Turbine Ltd. share price target

Triveni turbines revenue in Q4FY17 has declined 10.8% YoY due to lower exports and rescheduling of dispatches of some large orders which were delivered in the current quarter. The EBITDA margins in Q4FY17 have fallen by 573bps on the back of increased employee and operating cost to reach 19.6% from 25.3% for corresponding last year. A surge in other income (+209.7%) leads PAT to Rs.266 mn.

Triveni Turbines (TRIV) 4QFY17 revenue declined 14.6% YoY, owing to lower exports (-21.6% YoY), led by rescheduling of dispatches at the last minute. Increase in employee and operating costs led to ~460bps decline in EBITDA margins to 21.0%. Driven by higher other income (Rs 101mn, 610% YoY), APAT stood at Rs 272mn (-20.6% YoY).

Part of the Triveni group, Triveni Turbine Limited (TTL) is one of the world's largest manufacturers of sub-30 MW steam turbines which finds its application in industrial & renewable power solutions. It enjoys market leadership in the duopolistic Indian sub-30 MW steam turbine market with a dominant 60 % share despite strong competition from Siemens. It has ramped up its exports over the past 2 years and boasts of a track record of over 3,000 steam turbines installed and 12 GW power generation capacity created in over 70 countries. It also entered into a joint venture with global major General Electric in 2010 where it offers a portfolio of steam...

We arranged an investor meet with Nikhil Sawhney, VC & MD of Triveni Turbine Limited (TRIV). He reiterated the companys growth strategy for the international markets, which is being reflected in the company?s growing enquiry base.

To stay competitive, Triveni has carved out a niche in Indian capital goods space - up to 30 MW turbines - by purveying its wares to cogeneration based captive power plants, renewable based independent power plants, agro-based cogeneration units and renewable waste heat. In addition to stimulus provided by the 'National Capital Goods Policy' - shoring up domestic production; technology sharing; export promotion; easy finance availability, India's humongous renewable energy capacity addition plans (175GW by 2022 from some 50 GW installed now) bodes well for the capital...

Stable Q3FY17; Enquiry Pipeline Encouraging Enquiry pipeline encouraging: Enquiry pipeline in the domestic market remainsaround 2.5Gw of which co-gen accounts for 67%, metals and renewable accounts for 20%. International enquiry book stands at 7Gw and the geographical spreadcomes about 135 countries which are close to twice the markets currently being served. GETL pipeline accounts for about 3Gw out of 7Gw.

Triveni Turbines (TRIV) 3QFY17 revenue (flat YoY) was below our estimates. However, better-than-expected EBITDA margins (26.3%, 550bps YoY) led to an in line PAT (Rs 351mn, 19% YoY). The superior EBITDA margin was led by the execution of high margin export orders and strong growth in after-market sales ( 27% YoY). Export ( 163% YoY) continues to be the growth driver, while the domestic segment (-41% YoY) continues to decline. Order book (Rs 6.3bn) declined 7% YoY.

Healthy Revenues and Margins, while Order Intake Lags: Overall order intake for Triveni Turbine Ltd (TTL) decreases to Rs.3091mn inH1FY17 compared to Rs.3813mn in H1FY16 while the consolidated order book stands at Rs.6119mn. The outstanding order book dominated by export orderswhich grew by 9% on YoY basis reaching to 44.5% of the order book.

Triveni Turbine (Triveni) reported a steady quarterly performance with revenue/PAT growth of 13/17% YoY in line with our estimates. Export ( 72% YoY) continues to be the growth driver while the domestic segment (-21% YoY) continues to decline. Exports led growth was witnessed across both products ( 14% YoY) and aftermarket sales ( 9% YoY).

Exports gaining traction; to drive growth irrespective of domestic scenario: Export at INR 96cr grew by 137% in 1QFY17 and constiituted 59% of the overall revenues, up from 42% in 1QFY16. Export revenues would continue to grow at a robust pace and keep increasing their share in revenue thereby reducing the company's dependence on the stagnant domestic market (domestic revenues declined by 22% during the quarter to INR 66cr (41% mix). Triveni is now focusing on getting closer to its clients by opening service centers in various geographies like UK, Dubai, Indonesia, SE Asia and LATAM. This should further strengthen Triveni's value proposition as clients would now...