Buy Kalpataru Power; tgt of Rs 198: Anand Rathi Securities

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Buy Kalpataru Power; tgt of Rs 198: Anand Rathi Securities

Anand Rathi Securities is bullish on Kalpataru Power Transmission and has recommended buy rating on the stock with a target of Rs 198 in its January 31, 2011 research report.

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Anand Rathi Securities is bullish on Kalpataru Power Transmission and has recommended buy rating on the stock with a target of Rs 198 in its January 31, 2011 research report.

"Kalpataru and its subsidiary JMC Projects reported healthy 3QFY11 results. The order pipeline (PowerGrid and state) is robust. We expect orders of Rs 13 billion in 4QFY11 and an order book of Rs 54 billion by Mar'11. Net sales grew 10.3% yoy to Rs 7.9 billion, 2.5% more than we expected. Revenue was marginally lower, by Rs 200 million-250 million, owing to execution delays in Algeria (unrest in neighbouring countries) and extended monsoons in the home market."

"The order book, at Rs 50 billion, was flat yoy, 1.9x FY10 sales. Orders were +Rs 7 billion in 3Q. The transmission segment constituted 90% of the order book. Nearly 75-80% of the unexecuted orders have a price-variation clause. The consolidated order book was Rs 93 billion including JMC's order book of Rs 43 billion. EBITDA grew 12.7% yoy to Rs 926 million. The margin rose 25bps yoy, to 11.7%. Net profit grew 15.2% yoy, to Rs 508 million, 9.6% more than estimated, chiefly due to higher 'other income' of Rs 116 million: carbon credits (Rs 30 million), subsidiary dividend (Rs 20 million) and treasury income (Rs 66 million)."

"We reiterate our positive view on the stock and maintain our target of Rs 198: standalone business at Rs 183, based on 14x FY12e earnings, and Rs 14.7 for JMC Projects. Key risks: keener competition and rising interest and commodity costs. We maintain our Buy, with a target of Rs 198," says Anand Rathi Securities research report.

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