Buy Triveni Turbines; target of Rs 130: Sharekhan

Sharekhan's research report on Triveni TurbinesFor Q3FY2016, Triveni Turbines Ltd (TTL) reported a 31% Y-o-Y growth in revenue led by a strong 40% growth in product segment revenue. The after-market (AM) segment reported mere 5% growth as AM orders worth Rs15 crore got deferred to Q4FY2016. Higher marketing cost and allocation for corporate social responsibility activities led to OPM contraction by 44BPS to 20.7%. Higher tax rate and lower other income led to lower growth in PAT to Rs27.5 crore. On the back of a strong order book and spillover of orders, the management is expecting a robust growth in Q4FY2016. We have fine-tuned our earnings estimates mainly to accommodate M9FY2016 results, a lower-thanexpected order inflow in domestic business and better earnings visibility in JV. We expect its net profit to double (CAGR of 27%) in three years, FY2015-18. We like the stock for its strong competitive positioning in the domestic market, international marketing efforts, margin profile and healthy balance sheet (it is a debt-free company with superior return ratios). While continued sluggish capex activities in India has recently hammered the investment sentiments in the stock, we feel that its global focus and expected order pipeline of GE JV is likely to make it an outperformer in the capital goods space in the near future. We have maintained our Buy rating on the stock with a revised price target of Rs 130 (at 25x on the average of its FY2017E and FY2018E EPS). For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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