Buy Triveni Engineering; target of Rs 100: ICICI Direct

ICICI Direct's research report on Triveni Engineering

Triveni Engineering (TEL) reported strong Q3FY21 results with sustained domestic sugar & distillery volumes & robust growth in operating profits. Consolidated revenue increased 5% to Rs 1123.1 crore led by 6.8% growth in sugar segment & 7.2% growth is distillery segment. Sugar volume increased by 6.7% to 2.71 lakh tonnes mainly on account of higher domestic sale quota. The company also exported 14244 tonnes of sugar pending from previous seasons export quota. The company is holding 2.82 lakh tonnes of sugar valued at Rs 30.9 / kg. Distillery volumes increased by 3.8% to 2.24 crore litre. Distillery realisation was up 1.5% to Rs 47.8/litre. Engineering businesses continued to remain impacted by pandemic related execution delays. Power transmission sales were down 52.8% to Rs 21.3 crore mainly due to deferment of supplies from Q3 to Q4. Water business sales was down by 14.7% to Rs 60.2 crore. Outstanding order book for power transmission & water business was Rs 160 crore & Rs 827 crore, respectively. Operating profit increased 82.6% to Rs 160.5 crore on account of lower sugar inventory valuation at the end of Q2FY21. Led by higher operating profit & lower interest cost, PAT increased to Rs 94.7 crore as against Rs45.2 crore in corresponding quarter.

Outlook

We value the stock at 1.3x FY22 book value with a revised target price of Rs 100/share (earlier target price was Rs 95/share) and maintain BUY rating.