Prabhudas Lilladher's research report on Kalpataru Power Transmission
Kalpataru Power Transmission’s (KPTL) quarterly performance was impacted due to lower dispatches in T&D business, lower order inflow in H1FY22, slower execution in O&G, higher commodity & freight cost and CTC provisioning. In Q4FY22 order inflow grew 52% YoY to Rs46bn, including one large T&D order won in Chile worth ~Rs32bn. Order book stands strong at Rs157.6bn (2.2x FY22 revenue). Domestic T&D prospects improved in last couple of months and capex is likely to be driven from state government and PGCIL in near term. International T&D is expected to continue its momentum, backed with multilateral funding. Management guided 10-15% revenue growth and EBTIDA margin to be ~9% for FY23. Promoter pledge is expected to come down Q2FY23 onwards. Given execution challenges, higher commodity price & freight cost and supply chain disruption, we revise our EPS estimates downwards by 18.2%/13.5% for FY23/24. We believe supply chain normalization and softening of commodity price in the long run will benefit KPP owing to 1) robust order backlog, 2) strong outlook from international markets, revival in domestic T&D, along with growth emerging in segments such as Railways/ O&G 3) deleveraging backed by asset monetization (Indore project) 4) strong performance in Linjemontage and 4) improving operation performance of Fasttel.
At CMP stock trades at PE of 13.2x/10.2x FY23/24E. We maintain ‘Buy’ rating on stock with revised TP of Rs421 (Rs467 earlier).
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