Buy Triveni Turbine; target of Rs 340: Prabhudas Lilladher

Prabhudas Lilladher's research report on Triveni Turbine

We revise our EPS estimates by 9.7%/4.1%/3.8% for FY23/24/25, given robust enquiry pipeline, healthy order book, focus on aftermarkets segment and increasing opportunities from Europe due to energy transitions. In Q3, TRIV reported strong revenue growth of 44.7% YoY driven by 118% growth in aftermarket sales (on a low base). Despite gross margin improvement (up 384bps YoY), EBITDA margins were impacted (down 64bps YoY) due to subcontracting charges related to refurbishment order in South Africa. However, margins are expected to sustain within 19-21% range in medium term driven by better product mix (led by exports and aftermarket) and operating leverage. We believe TRIV is favorably placed to capitalize on growth given 1) its leadership position in domestic 0-30MW turbine market, 2) traction in 30-100 MW and API turbines, and 3) robust aftermarket strategy encompassing spares, service & multi-brand refurbishments.

Outlook

Maintain ‘BUY’ rating at TP of Rs340 (Rs328 earlier), valuing it at PE of 35x FY25E.