Scripscan:Triveni Turbine Ltd
cmp:34
Code:533655
Story:Triveni Turbine Ltd (TTL), part of the Triveni Group is a leading industrial steam turbine manufacturer upto 30 MW with over four decades of experience. TTL was formed in October 2010 after Triveni Engineering & Industries Ltd demerged its steam turbine business unit into an independent entity. Post the demerger the stock got listed on October 28, 2011. TTL’s main business is manufacturing and selling steam turbines based on customers specifications. It also manufactures spare parts and provides after sales services for turbines manufactured by the company as well as others. The company commands a market share of 60% in India up to 30 MW range. TTL has done over 2,500 installations, in 18 diverse industries in 30 countries. The manufacturing facility is located in Bangalore and has an annual capacity of 150 (nos) turbines.TTL has formed a 50:50 JV with GE called as GE Triveni Ltd which will cater to the 30 - 100 MW steam turbine market. GE will market the products in the international market whereas TTL will do the marketing for the domestic market. According to management the market size for these products is estimated at $2.5 bn internationally and ~$300 mn domestically. The orders will be booked by the JV which in turn will divert 40 - 45% of that to TTL which is capable of in - house production. Only the bought outs will be managed by the JV. TTL plans to focus on the exports market (which is 11% of its FY11 topline) on the back of its JV with GE. The JV has recently won an order for a 35 MW turbine in the domestic market.The company has no significant capex plans or investment lined up in the near future. The management is confident of maintaining its margins going forward. TTL operates on a negative working capital because it receives 20% advance from all its customers and maintains low inventory. This trend will continue going forward. The current debt on TTL’s books is Rs. 73 cr and aims to be debt free by FY13. The management has given a guidance of 6 - 8% topline growth for FY12 and 14 - 15% growth in FY13. Based on our rough estimates, at CMP the stock trades at 12.8x its FY12E EPS. The JV with GE will be the key trigger of growth for the company as it enters the 30 - 100 MW turbine market. On the back of slow order booking in H1FY12, we expect TTL to post bad results in terms of its topline, however higher order inflows in the coming quarters will be a positive for the company for next year. We will have to wait and watch how the operations at the JV unfold in terms of order booking and execution.We are positive on the company on a long term basis.
Source:NB
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