ICICI Direct is bullish on Kalpataru Power has recommended buy rating on the stock with a target price of Rs 520 in its research report dated August 08, 2018.
ICICI Direct's research report on Kalpataru Power
For Q1FY19, Kalpataru Power (KPTL) reported revenues at Rs 1324.9 crore, up 13.3% YoY, below our estimate of Rs 1438.9 crore. On a consolidated basis, revenues grew 9.0% while the PAT margin improved 180 bps to 4.3% due to the better performance of developmental assets and interest rate reduction EBITDA came in at Rs 157.1 crore with EBITDA margins of 11.9%, better than our estimate of 11.4%. The EBITDA margin expansion was on account of lower raw material and operating expenses PAT was at Rs 81 crore, nearly in-line with our estimate of Rs 85 crore. For Q1FY19, PAT grew 15% YoY. The effective tax rate was at 34.9%, marginally up 30 bps YoY. During the quarter, consolidated net debt went up by Rs 744 crore to Rs 3667 crore YoY whereas standalone debt was at Rs 1030 crore.
The overall strong order book with strong traction in railways and pipeline business, improved subsidiary performance, operating leverage gains and good traction in road BOT projects are expected to support consistent growth and improve return ratios. With revenue CAGR of 15.2% and 18.5% PAT of CAGR, we value KPTL on SoTP basis. Hence, we maintain BUY recommendation with a revised fair value of Rs 520/share (with base business at 15x FY20E).
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