Sharekhan's research report on Triveni Engineering and Industries
Triveni Engineering & Industries’ (TEIL’s) operating performance in Q1FY2023 was affected by nil exports during the quarter. Revenues grew by 23% while the EBIDTA margins decreased by 509 bps to 8.4%. Excluding export subsidies in base quarter, margins would be lower by 100 bps y-o-y. India’s sugar production is expected to grow by 3-4% in the next sugar season. Debottlenecking of facilities, better surveillance and good rainfall in TEIL’s cane production area will help in generating higher yields for the company in next sugar season. Ethanol capacity to expand to 1,110 KLPD by FY2024 from 660 KLPD currently. Steady sugar sales led by higher realisation, higher revenues from the distillery business, and recovery in the engineering business (order book of Rs. 1,889 crore) would drive earnings in the near term.
Stock has corrected by ~23% in past three months and trades at 16.3x and 13.2x its FY2023E and FY2024E earnings, respectively. We maintain a Buy with a revised PT of Rs. 285.
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