Kalpataru Power Transmission is gaining in trade today after Quantum Securities initiated its coverage on the stock with a buy rating. Quantum Securities has set a target of Rs 240, an upside of nearly 60 percent on the stock by FY16 end. The stock is currently trading around Rs 200.
Speaking to CNBC-TV18, Mofatraj Munot, chairman, Kalpataru Power Transmission said their margins will be better in FY15 on the back of completion of projects. The company is eyeing margins of around 10 percent for FY15.
Kalpataru Power’s order wins are seen at Rs 1,400 crore and the FY15 revenue growth around 14-15 percent. The company has secured order wins from Cairn India and GAIL of around Rs 140 crore each. Their current order book stands at Rs 5,000 crore, added Munot.Below is verbatim transcript of the interview:
Q: Give us a quick update with regards to what is going on in your business? Your L1 projects, at the end of Q1, were at around USD 16 billion, what is the current status?
A: We are L1 in about Rs 2,450 crore.
Q: In this year itself do you look to close out any of it?
A: We have already acquired Rs 1,500 crore in first half and we expect to reach up to Rs 4,500 crore.
Q: Have you won any new orders in the last one month because your earnings came out about a month back? Since then any big orders that Kalpataru Power has won?
A: Last six months, a lot of tenders were delayed and that is why we are L1 in many projects, most of them are overseas and Power Grid as well.
Q: Could you tell us about GMC’s revenues then, what do you expect the margins to be stable at around that 6-7 percent, what is the order book looking like with regard to GMC?
A: Order book is healthy, it is around Rs 5,000 crore and we expect to achieve the same turnover of the last year. The margin is going to improve slightly.
Q: What would be the reason for that improvement?
A: It would be on the back of the completion of the projects, most of our projects are nearing completion or completed.
Q: In the previous quarter you had order wins of about Rs 920 crore, what is the expected order win in the coming quarter in December and even in Q4?
A: In Q3 we must have got about Rs 1,400 crore. We expect to reach again Rs 5,500 crore overall.
Q: You were expected to scale up a couple of new businesses, that is with regards to railways, that has been a very exciting space over the last few months as well as the pipeline space, so could you give us some kind of update, has there anything new come with regards to both these two businesses?
A: As far as pipeline is concerned, we have secured two orders recently, one from Cairn and one from GAIL and we expect some more orders within this year.
Q: What is the size of the orders that you have got from Cairn as well as GAIL?
A: They are about Rs 140 crore each.
Q: What is the expected revenue growth in FY15 for the company as well as the margins?
A: Growth will be in the range of 14-15 percent and we will maintain that. The EBITDA will be around 10 percent.
Q: What about FY15, are the new orders that you are winning coming in at improved pricing? In FY16 can we see your margins improving from the current 10 percent?
A: Right now whatever we are getting is what we have quoted in the last three-four months. A lot of hope is there for the new tenders that are likely to come in next quarter or so and we hope that the price level will be little better than what it was earlier.
Q: Your guidance stands at 15 percent, there was a fear that it could be in the range of 12-15 percent and maybe at the low end of the guidance?
A: Roughly we will maintain 14-15 percent.
Q: I was also reading somewhere that the pending equity requirement in your road projects is about Rs 100 crore and partly it is on account of cost overrun, so is the company looking to infuse some equity to meet the shortfall?
A: No, we will be borrowing the required funds to meet the equity requirement.
Q: What about the GMC projects business because their revenues have been subdued, so what will be the revenue growth in GMC in FY15?
A: The revenue growth will be in the range of about 5 percent. We are more in a consolidation phase as far as GMC is concerned because a lot of infrastructure projects are not coming up so far and they are on a completion phase. We have a lot of building projects including a recent about Rs 900 crore one in Bangalore.
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