ICICI Direct is bullish on Kalpataru Power has recommended buy rating on the stock with a target price of Rs 430 in its research report dated February 04, 2019.
ICICI Direct's research report on Kalpataru Power
For Q3FY19, KPTL reported revenue at Rs 1724.7 crore registering strong growth of 21.7% YoY, above our estimate of Rs 1672.9 crore driven by strong execution. On a consolidated basis, revenues grew 26.0% to Rs 2179.6 crore while PAT margins improved 100 bps to 4.3% due to the better performance of developmental assets • EBITDA came in at Rs 183.9 crore with EBITDA margins of 10.7%, largely in line with our estimate of Rs 180.7 crore, owing to focus on project completion and cost optimisation initiatives • KPTL reported PAT of Rs 92.0 crore, marginally below our estimate of Rs 93.8 crore. For Q3FY19, PAT grew 22.4% on a YoY basis. However, the effective tax rate was at 34.8%, which was more than our estimates and came in higher by 10 bps on a YoY basis.
The overall strong order book with strong traction in railways and infra (oil & gas, pipeline business), improved subsidiary performance, operating leverage gains and good traction in road BOT projects will support consistent growth and improve the return ratios. With revenue and PAT CAGR of 17.3% and 18.8%, we value the KPTL on a SoTP basis and maintain BUY with revised fair value of Rs 430/share (with base business at 12x FY20E). However, a gradual up-tick in execution could lead to much stronger revenue growth, going ahead.
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