Buy Triveni Engineering and Industries: target of Rs 325: Sharekhan

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E.  Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

Sharekhan's research report on Triveni Engineering and Industries

Triveni Engineering & Industries’ (TEIL’s) operating performance in Q4FY2022 was affected as no export sale took place in Sugar Season 2021-22. Overall revenues stood flat y-o-y at Rs. 1,192.1 crore. EBITDA margins improved by 83 bps y-o-y to 14.7%. The absence of exports also dragged sugar business’ revenues by 14.7% y-o-y to Rs. 846.81 crore; distillery business’ revenues grew by 27% y-o-y to Rs. 161.6 crore. Ethanol capacity expansion of 200 KLPD came on-stream in April 2022 (enhanced distillery capacity to 520 KLPD). Steady sugar sales led by higher realisation, higher revenues from the distillery business, and recovery in the engineering business (order book of Rs. 1,735 crore) would drive earnings in the near term.

Outlook

Stock trades at 13.6x and 11.6x its FY2023E and FY2024E earnings, respectively. We maintain Buy with a revised PT of Rs. 325.

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