Triveni Engineering & Industries - A deep value Opportunity?

Investment Thesis

  • Triveni Engineering is valued at ~1800 crores.
  • It holds ~22% of Triveni Turbine valued at around ~900 crore
  • The company has an additional ~100 crores in Investments

Applying a 10% discount to it’s stake in Triveni Turbine, the engineering & sugar business is available at:
1800 - 0.9*900 - 100 = ~ 900 crores

This translates to a TTM PE multiple of ~3.8x (TTM PAT of ~240 crores) for the engineering & sugar business combined.

A quick look at Peer group Valuation

It is important to note that the two peers dont have any other business apart from Sugar while Triveni has an Engineering (gears) and water business (combined ~15% of Sales).

Background

  • Triveni Engineering & Industries Ltd (TEIL) is a well diversified and an integrated player in the sugar industry.
  • The demerger of the engineering & sugar business got called off by the management recently. The indiscriminate dumping of the stock has resulted in this deep value scenario. The margin of safety appears to be decent enough.

(I have excluded the details of company business since it’s readily available. Just focusing on the key numbers. Happy to add if you deem necessary)

Risks
Commodity/cyclical nature of industry

Please share your thoughts, questions and loopholes in the thesis.

Disclosure: Invested ~5% of Portfolio.

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