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Buy Triveni Engineering and Industries: target of Rs 125: Sharekhan

Sharekhan is bullish on Triveni Engineering and Industries has recommended buy rating on the stock with a target price of Rs 125 in its research report dated April 13, 2021.

April 14, 2021 / 10:54 AM IST
An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.

An Edelweiss research report for Q4FY21 says road tonnage continued to improve, evident in e-way bill generation (up 6% QoQ) and improved core trucking rentals. “We estimate tonnage would increase by three–five percent for truckers. Asset-light plays Mahindra Logistics and TCI Express remain our preferred picks due to their ability to scale up/down as the environment demands,” the report said. Edelweiss is bullish on Blue Dart Express due to the pandemic-induced boom in e-commerce and its leaner cost structure. It has retained a ‘buy’ call on Mahindra Logistics, TCI Express and Blue Dart Express.

 
 
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Sharekhan's research report on Triveni Engineering and Industries


With the government focusing on achieving ethanol blending of 20% by CY2025; India’s ethanol requirement will increase significantly (4-5 billion litres required for 10% blending). TEIL is adding 160 KLPD B-Heavy/Cane juice and a 40 KLPD grain-based distillery (to be operational by Q3FY22). With augmentation of distillery capacity, distillery revenues will clock a 21% CAGR with realisation inching up to Rs. 52 per litre; margins to also improve in the coming years. With improvement in profitability and stable working capital; free cash flow (FCF) is expected to improve (cumulative FCF of ~Rs. 2,060 crore likely over FY20-23) and aid better dividend payouts/ prudent buyback policy.



Outlook


We maintain a Buy on Triveni Engineering & Industries (TEIL) with revised target price of Rs. 125. Attractive valuation of 4.7x versus historical average of 6.3x and changing industry dynamics make it better play in the sugar segment.


For all recommendations report, click here


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first published: Apr 14, 2021 10:54 am

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