Buy Kalpataru Power; target of Rs 394: Edelweiss

Edelweiss' research report on Kalpataru Power

Kalpataru Power’s (KPP) Q4FY17 revenue growth of 13% came 10% below consensus due to cancellation of international projects worth INR 10bn plus on account of political issues. On the positive side, the company continued to reap benefits of efficient working capital management, amply reflected in dip in interest cost—down 15% YoY.

Outlook

With revenue visibility of 1.8x above u say 1.7 and structural drivers in place to spur T&D & railways spending, KPP is strongly positioned to clock 20% plus EPS CAGR over FY17- 19E. We revise up FY18E and FY19E EPS 6% each factoring in lower interest cost. We maintain ‘BUY/SO’ with SOTP-based target price of INR 394 (earlier INR 360).