Buy Triveni Engineering and Industries, target of Rs 340: Sharekhan

Sharekhan's research report on Triveni Engineering and Industries

Triveni Engineering & Industries Limited (TEIL) delivered mixed operating performance in Q3 with revenue growing in double digits by 34% y-o-y to Rs. 1,658.7 crore, while EBITDA margin declined by 476 bps y-o-y to 11.7%, leading to 13% y-o-y growth in reported PAT to Rs. 147 crore. Sugar recovery rate in Q3 was lower due to delayed rains, but it is expected to improve in Q4. This along with higher realisation, led by firming of domestic prices and higher export realisation, will help the sugar business’s margins to improve in Q4. Ethanol capacity is expected to expand to 1,110 KLPD by FY2024-end from 660 KLPD currently. TEIL would do capex of Rs. 90 crore in the sugar business towards modernisation, debottlenecking, and efficiency improvement, while it will do capex of Rs. 100 crore in the power transmission business towards capacity expansion.

Outlook

TEIL’s stock price is currently trading at 15.1x and 11.4x its FY2024E and FY2025E earnings, respectively. We maintain Buy with an unchanged PT of Rs. 340.

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