Prabhudas Lilladher is bullish on Kalpataru Power Transmission has recommended buy rating on the stock with a target price of Rs 662 in its research report dated November 07, 2019.
Prabhudas Lilladher's research report on Kalpataru Power Transmission
Kalpataru Power Transmission Ltd (KPTL) reported strong set of numbers for 2QFY20 which were higher than our and consensus estimates. Revenue/PAT grew 25%/39% YoY mainly on the back of strong execution across the segments viz. T&D, Oil & Gas Pipeline and Railways segments. Order inflow was up 22% YoY at Rs24.9 bn, mainly driven T&D business. The company has maintained FY20 order inflow guidance of Rs100 bn led by opportunities in T&D (Green Energy Corridor projects in domestic market and international projects) and Infra sector. KPTL is confident on achieving growth guidance of minimum 20%, EBITDA margin of 10.5-11%. Approval process for transfer of Transmission Assets to CLP is progressing well and are as per planned timelines. We have cut standalone EPS for FY20/21E by 5/7% due to lowering margin and higher interest cost and tax adjustments. With strong revenue visibility on back of robust order-backlog, steady margin profile and positive outlook in T&D and emerging segments like Railways/Oil & Gas, KPTL is expected to deliver ~26% earnings CAGR over FY19-21E.
With focus on improving capital allocation, balance sheet strengthening and strong visibility, we maintain PE multiple of 14x to core EPC business and maintain BUY with revised SOTP based TP of Rs662.
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