Buy Kalpataru Power; target of Rs 196: JRG Securities

4422 Investors following Kalpataru Power. Share this News with them.

0

Like this story, share it with millions of investors on M3

Buy Kalpataru Power; target of Rs 196: JRG Securities

JRG Securities is bullish on Kalpataru Power Transmission and has recommended buy rating on the stock with a target of Rs 196 in its February 5, 2011 research report.

Post your opinion here

 

0

Tweet

Share on Tumblr

RELATED NEWS Buy ITC; target of Rs 208: Prabhudas Lilladher Buy Andhra Bank; target of Rs 171: KRChoksey Buy Bharti Airtel; target of Rs 392: Networth Stock Broking ALSO READ See previous views by JRG Securities See what other Experts & Brokerages are saying about Kalpataru Power See messages about Kalpataru Power Kalpataru Power BSE | NSE 30/05/12 Are Mutual Funds betting on Kalpataru Power?

JRG Securities is bullish on Kalpataru Power Transmission and has recommended buy rating on the stock with a target of Rs 196 in its February 5, 2011 research report.

"Kalpataru Power Transmission (KPTL) registered decent growth on the Revenue front as the Net Sales stepped up by 10.3% YoY and 25.6% QoQ to Rs 793 crore (Q3, 11). Sales performance was aided by 13% YoY rise in the Transmission and distribution segment of the company which scaled up to Rs 689 crore (Q3, 11). Meanwhile, Infrastructure segment continued with its subdued performance and recorded a de-growth of 3% YoY; however the same gained 21.5% QoQ to Rs 91 crore (Q3, 11). For the Nine-month period, total Revenue rose around 11% to Rs 1962 crore as against Rs 1759 crore in the corresponding period of the last year whereas the Net Profit for the same period was up by 14% to Rs 129 crore from Rs 113 crore last fiscal."

"On the operating side, the Net Raw materials grew more than 20% YoY and around 28 QoQ to Rs 381 crore. Same as a % of Sales surged to 48.1% (Q3, 11) against 44.1% (Q3, 10) and compared to 47.3% (Q2, 11). While the Raw Materials costs jumped other heads of the operative expenses namely, Erection and Sub-contracting costs, Employee costs and other expenses; all registered a modest decline or grew at a lesser rate. Cumulatively, total Operating expenses of the company rose less than 10% YoY and 25.5% QoQ to Rs 700 crore. EBITDA jumped to Rs 93 crore during the quarter while OPM's improved both yearly and sequentially to 11.7%. Accelerated by higher Other Income, the Bottom-line performance was healthy which moved up to Rs 51 crore (Q3, 11) registering a growth of 15.2% YoY and 23.3% QoQ. Despite the interest costs doubling on a yearly comparison, Net profit was higher 15% YoY to Rs 22 crore while the NPM's remain around the 6-6.5% range ."

"Accommodating the financial performance during the quarter, we have prune down our Top-line estimates for FY 11E and FY 12E by 3.5% and 5.4% respectively. We now expect KPTL's Net Sales to grow at a CAGR of over 14% by FY 12 to Rs 3368 crore (FY 12E) as against Rs 2588 crore (FY 10). With the above effect, we anticipate the EBITDA to rise at a CAGR of 15.6% during the same period to Rs 408 crore (FY 12E) as against Rs 305 crore (FY 10) while the OPM's are seen stable around the 12% mark."

"At the Trailing market price of Rs 133, KPTL is trading at 10.2X and 8.8 its FY 11E and FY 12E, EPS of Rs 13 and Rs 15.1 respectively. We earlier recommended KPTL on an SOTP basis valuing its Standalone Business at 15X its FY12E EPS while the stake in its Infrastructure subsidiary at 20% discount (Holding company). Considering the company's healthy order backlog, its vast experience, firm execution track record in the Power T&D sector and moreover solid growth opportunity in the domestic and overseas power sector; we maintain our positive stance on the Medium to Long-term growth prospects of the company. However, due to the reduction in our growth targets, ongoing constraints against the smooth execution of the Power and Infra projects in India and lag in Order inflow from PGCIL and state SEB's; we are reducing our Target multiple on the stock."

"We maintain our Rating on the stock with a modified Target price of Rs 196 (Rs 251 Earlier), valuing the Standalone business at 12X FY12E EPS (Rs 181) and taking its stake in JMC at Rs 15 (20% Holding company discount)," says JRG Securities research report.

Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management.Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

To read the full report click on the attachment