Buy Kalpataru Power Transmission; target of Rs 296: Prabhudas Lilladher

Prabhudas Lilladher's research report on Kalpataru Power Transmission

Kalpataru Power Transmission Ltd (KPTL) reported decent quarterly performance despite pandemic and onset of monsoon led by better execution, higher other income and lower interest cost. Order inflows came in at ~Rs7bn during 2Q majorly contributed by T&D segment (98%) with the company being further L1 in orders worth ~Rs30bn. OB stands at ~Rs123bn spread across segments, providing revenue visibility for next few years. Given the healthy tendering pipeline KPTL has maintained its order inflow guidance of Rs90-1000bn (PLe ~Rs100bn) while has slightly lowered its revenue growth guidance to 5-10% (vs earlier 8-10%) with EBITDA margins of 10.5-11% for FY21E.

Outlook

We maintain BUY with a revised SOTP based TP of Rs296 (earlier TP Rs276). The TP has been revised upwards mainly due to inclusion of equity investment of transmission assets.

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