Triveni turbine - profit engineering

Recently hived off from triveni engineering is a high ROE business. Provide steam turbine solutions to various industries. Worth a detailed study. Could be next thermax.also has a JV with GE for 30 to 100 MW turbines.

Co. repr by Dhruv M Sawhney, CMD. Key takeaways of the call by Capital Mkt

Net Revenue for the quarter ended Dec 2014 was at Rs 150 crore, an increase of 7% over corresponding previous period. EBITDA was higher by 15% to Rs 38.5 crore with margin stand at 25.6% against 23.8% in corresponding previous period. Profit before Tax (PBT) at Rs 34.5 crore with a margin of 22.9%. Profit after tax (PAT) was higher by 14% to Rs 23.6 crore with a margin of 15.7%.

The overall turnover and profitability of the Company in 9M FY 15 has been in line with the expectation of the company. Net Revenue for 9mFY15 was higher by 14% to Rs 430 crore and the EBITDA was higher by 25% to Rs 103.3 crore with a margin of 24.2%. Eventually the Profit after tax (PAT) was higher by 25% to Rs 61.7 crore with a margin of 14.4%.

In Q3FY15 there has been some deferment of deliveries towards the end of the quarter which resulted in lower than anticipated turnover during the quarter. However, all these turbines will be despatched during Q4FY15, which should enable us to register a significant turnover in the Q4 FY15 and overall turnover for FY15 at much higher growth levels than the 9M levels.

The domestic capital goods sector, which was reeling under tremendous slowdown for the past few years, is yet to show signs of revival in terms of order booking even though more and more enquiries and customer meetings are happening, which the company believe is positive.

Even though the domestic market has not shown any improvement. The healthy order booking witnessed in Q2 FY 15 continued into the third quarter.

Triveni could maintain its domestic market leadership with market share upward of 60% in the current quarter as well.

The focus of the company on the export market and spreading its geographical reach is also gaining momentum. During the first nine months of the year, the company registered a growth in product exports order booking at almost 40% over the full year’s export order booking for FY14. This gives the confidence in projecting an expanded export business.

Overall, the outlook in the export market is quite robust and the company expects a strong order booking in the coming quarters from the export market so as to have a significantly higher export turnover in FY 16.

The high margin after-market business has also shown an improvement during the nine months period by achieving almost the same level of turnover as that of full year in FY14. Further, the export portion of after-market is also gaining significance with about 28% of the aftermarket turnover coming from export market. This base will help us in establishing a better market presence and reference in various geographies. To provide a platform for sustained growth in product and aftermarket export services, the company has established wholly owned subsidiaries in select countries. This will enable the company to exploit focused export markets much better and expand its overseas operations. The refurbishment market is forecast to show very good results quite soon.

Standalone order book as end of Dec 2014 was Rs 610 crore and consolidated order book was Rs 770 crore. With a robust carry forward order book, the company believe it should achieve significant growth in turnover and profits on both standalone and consolidated basis during FY15 and continue these growth rates in FY16.

The order inflow in the JV for nine months has been good with overall order book at Rs 230 crore. A strong order backlog will enable the JV to achieve a significant turnover in the current year and good growth in next year.

Order intake in Q3FY15 was 117 crore of which domestic is Rs 53 crore and exports orders were Rs 64 crore. Aftermarket orders in both domestic and exports markets is Rs 38 crore.

The share of export orders in the order backlog as end of Dec 2014 is about Rs 200 crore. The aftermarket order book is about Rs 60 crore as end of Dec 2014.

For less than 30 MW turbines the enquiries were for about 6.5 GW. Now enquiries are from about 117 countries.

Consolidated revenue and profit is expected to grow by 30% and 35% for FY15 and that is expected to sustain in FY16 as well. For standalone revenue the growth will be about 25% for FY15.

The company has no major capex for next 3 years barring the modest capex of about Rs 50 crore in expanding the capacity which get complete by March 2016. The company has significant contract manufacturing capacity both in Karnataka and neighboring state to rely on for ramp up.