Buy Kalpataru Power; target of Rs 104: KRChoksey

KRChoksey is bullish on Kalpataru Power Transmission and has recommended buy rating on the stock with a target of Rs 104 in its August 07, 2012 research report.

“Kalpataru Power Transmission Ltd (KPTL) registered strong standalone net sales growth of 20% on a YoY basis as sales increased to Rs. 699.4 cr. However, on account of MTM forex loss EBIDTA declined by 135 bps to 10.1% and interest cost increased sharply by 42.4% to Rs. 31.4 cr. Consequently PAT declined by 18.6% to Rs. 27.4 cr. Order backlog as of Q1FY13 stands at Rs 6,100 cr on back of strong order flows worth Rs 660 cr during the quarter.”

“KPTL registered strong execution as sales increased by 20% to Rs 669.4 cr. Transmission segment grew by 17% to Rs 611.2 cr and constituted 87% of the sales mix. The company maintained its sales growth guidance in the range of 15% to 20% for FY13. KPTL EBIDTA margins declined to 10.1% for Q1FY13 as the company booked a MTM forex loss of Rs. 5 cr on advances and creditors. Adjusting for MTM forex loss EBIDTA stood at 10.8%, above our expectation of 10.3%. Interest cost increased sharply to Rs. 31.4 cr as KPTL booked Rs 8 cr forex loss on foreign currency loans. Consequently PAT declined by 18.6% to Rs. 27.4 cr. KPTL maintained its order backlog at Rs 6,100 cr as of Q1FY13. During the quarter company received orders worth Rs 660 cr. PGCIL constituted Rs. 380 cr of the order inflows followed by order from Thailand worth Rs. 280 cr. Current order backlog is 1.9x TTM sales and gives revenue visibility for next 18 to 22 months.”

“At CMP of Rs. 70, Kalpataru is trading at a P/E of 5.4x its FY13 earnings and 5x its FY14E. Considering attractive valuations, pick up in execution and strong order backlog, we assign a P/E multiple of 8x to its FY13E earnings and recommend a “BUY” on the stock with a price target of Rs. 104,” says KRChoksey research report. 

Institutional holding more than 40% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies 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

Read More