Accumulate Kalpataru Power; target Rs 118: P Lilladher
Prabhudas Lilladher is bullish on Kalpataru Power Transmission and has recommended accumulate rating on the stock with a target price of Rs 118 in its January 29, 2013 research report.
February 01, 2013 / 11:00 IST
Prabhudas Lilladher is bullish on Kalpataru Power Transmission and has recommended accumulate rating on the stock with a target price of Rs 118 in its January 29, 2013 research report.
"Kalpataru reported sales of Rs8.8bn, up 11% YoY (PLe: Rs8.8bn). Transmission segment reported sales growth of 14% YoY to Rs8bn and Infrastructure segment reported sales de-growth of 14% to Rs712m. EBITDA margin was down 130bps YoY to 10.3% (PLe: 10%) due to execution of few low-margin orders and higher employee cost (up 32% YoY). The employee cost was up due to wage hike accounted in the current quarter and lower sub-contracting in few projects. Interest cost was up 4% YoY and 35% QoQ mainly on account of increased working capital, both YoY and QoQ and Rs40m forex loss for the quarter. Reported PAT was down 13% YoY to Rs354m (PLe: Rs455m).Standalone order book at the end of Q3FY13 stood at Rs65bn (up 18% YoY) and order inflow for the quarter stood at Rs9.5bn. Order book break-up is 50% domestic and 50% international and ~70% of the order book is without any commodity and price risk. The company has been able to consolidate its position in the domestic market by cornering ~20% market share in Power Grid order in Q3FY13. It has continued to spread its wings by entering two new countries in international markets, namely Uganda and Armenia.Kalpataru expects to end the year with ~15% sales growth and achieve similar growth of 15% in sales even for FY14. It also expects to end the year with an order backlog of ~Rs70bn and improve margins due to increased focus on international markets, improved focus on risk management and reduced competition in domestic markets. The company expects other businesses like railway and infrastructure to grow at ~12-15%.The stock is trading at 6.8X FY14E core earnings. We expect stock to deliver 15% CAGR in sales and 22% CAGR in earnings over FY13- 15E. Companies focus on international business and new business like railway will help drive growth and consolidation in domestic market and increased focus on risk management will help improve margins. We maintain 'Accumulate' on the stock with a target price of Rs 118," says Prabhudas Lilladher research report.Non-Institutions holding more than 90% 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 
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