Buy TD Power Systems; target of Rs 624: Emkay

Emkay's research report on TD Power Systems

TDPS reported muted revenues (consolidated) at Rs1.9bn (2% YoY, 24% QoQ).The product segment too reported flattish revenues at Rs1.1bn while TG projects reported 87%YoY growth in revenues to Rs403mn. The EPC segment (which will cease operations during 1QFY16) reported 37%YoY decline in revenues to Rs420mn. TDPS has completed the final two EPC jobs and is awaiting inputs from clients to commission the same over the next four weeks – post which the company would be closing its EPC division. In TG projects, TDPS would continue bidding for jobs in its Japan subsidiary.

Order backlog in the product segment stands at Rs3.4bn. Management has indicated of newer opportunities in the product segment which are likely to be announced in the near future. TDPS has been successful in reducing the working capital cycle and endeavor would be to further improve the same. The company continues to remain zero debt and carries cash balance of ~Rs2bn in its standalone entity. At current levels, the stock trades at 12X FY17EEPS. We maintain Buy with price target of Rs 624/share", says Emkay Global Financial Services research report.

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