Company KALPATARU POWER TRANSMISSION LTD

Company
KALPATARU POWER TRANSMISSION LTD.
Target 110-120
15 March 2014
Key Data Matrix as on 14.03.14 (BSE)
CMP(Rs.)
52 Week High/Low (Rs)
Market Cap (Rs Cr)
P/E x TTM
Industry
EPS TTM(Rs)
EV(Rs.Cr)
P/BVx
Face Value (Rs. Cr)
Book Value (Rs. In Cr)
Dividend Yield (%)
BSE Code
BETA-Sensex
Industry PE
85.45
96.30/56.00
1,311
9.02
POWER
9.64
1869.26
0.69
2
126.12
1.72
522287
0.63
8.87
Share Holding Pattern
19.91
50.92%
7.71
8.00%
3.43
19.42%
62.38%
10.20%
PROMOTORS
FII'S
make more, for sure.
KPTL, an integral part of Kalpataru Group is a leading multidimensional EPC
Contracting company with a diversified portfolio in Power Transmission &
Distribution, Cross Country Pipeline, Oil & Gas field Surface Facilities, Civil
Infrastructure Projects, Power Generation (biomass) as well as Railway projects. KPTL
is the company headquartered at Gandhinagar- capital city of the State of Gujarat, in
Western India with consolidated turnover of 54 Bn (USD 1 Bn) and an annual installed
capacity in excess of 180,000 MT of galvanized steel towers. Kalpataru Power owns
three large Fabrication plants for galvanized steel towers equipped with modern
machineries (more than a dozen CNC machines) and automated temperature
controlled galvanising baths, besides its state-of-the-art Testing Station and R & D
Centre. In addition to trained workmen at the plant and construction sites, the
Company has a competent resource of more than 2,000 managers and staff including
a full-fledged Design / Engineering Department with more than 60 qualified
engineers using PLS Tower, i-tower, STADD, PLSCADD, BOCAD, AUTOCAD facilities.
INDUSTRY OUTLOOK
Power transmission sector is the vital arteries of the entire power chain of any
country. The growth of power sector is important for the development of the robust
and non-collapsible transmission network. The transmission system planning in the
country, in the past, had traditionally been linked to generation projects as part of the
evacuation system. Ability of the power system to safely withstand a contingency
without generation rescheduling or load-shedding was the main criteria for planning
the transmission system. However, due to various reasons such as spatial
development of load in the network, non-commissioning of load center generating
units originally planned and deficit in reactive compensation, certain pockets in the
power system could not safely operate even under normal conditions. This had
necessitated backing down of generation and operating at a lower load generation
balance in the past. Transmission planning has therefore moved away from the
earlier generation evacuation system planning to integrate system planning. n the
last 5 years, power generation capacity has grown by ~50%, whereas transmission
capacity has increased by ~30% . As per the 12th Five Year Plan, the future expansion
in power generation capacity in India is planned around 88GW . In order to meet this
capacity, investment in the transmission sector needs to be increased.
INVESTMENT RATIONALE
INSTITUTION
OTHERS
Mohit Taneja +91-11-30211872
[email protected]
CONTINUOUS AND HEALTHY GROWTH IN SHREE SHUBHAM LIGISTICS (SSL)
Due to improved utilization and incremental capacity the revenue of SSL grew by 14%
to 73 crore for Q3FY14. At the end of last quarter, the current capacity of SSL stood at
1.3 million metric tonne (MT). It has recently started 6 new warehouses in Madhya
Pradesh. The new capacities are currently running at the utilization levels of 60-65 %
and old capacities is running at the utilization of 80-85% levels. The company has
planned investment for INR 2.5 bn for the expansion over FY14-16. The management
is also contemplating the further expansion in the third phase of the capacity
Mansukh Securities and Finance Ltd
Mansukh House, Plot No. 6, Opp. Mother Dairy Plant, Patparganj Road, Pandav Nagar,
New Delhi-110002, Phone: 91-11-30211800, 47617800, Fax: 011-30117710,
Email: [email protected], Website: www.moneysukh.com
SEBI Reg.No: BSE: INB 010985834, F&O: INF 010985834
NSE: INB 230781431, F&O: INF 230781431,
DP: IN-DP-CDSL-73-2000, IN-DP-NSDL-140-2000
MCX/TCM/CORP/0740 NCDEX/TCM/CORP/0293
Company
KALPATARU POWER TRANSMISSION LTD.
make more, for sure.
SENSEX AND KPTLCOMPARISON
22500
100
22000
90
21500
80
21000
70
20500
60
20000
50
19500
40
19000
30
18500
18000
20
17500
10
17000
0
S& P B SE SEN SEX
K P TL
BSE POWER & KPTL COMPARISON
2000
100
1800
90
1600
80
1400
70
1200
60
1000
50
800
40
600
30
400
20
200
10
0
0
S&P BSE PO W ER
KPTL
DIVERSIFIED ORDER BOOK REDUCES THE OVERALL RISK OF COMPANY
KPTL has the healthy order book and the most favourable condition for the company
is that their order book is well diversified. It has the order ranging from road projects
of Rohtak- Bawal project , Agra-aligarh project, Nagpur- Wainganga project and
Rewa- Madhya Pradesh project. It order book also contain order for the transmission
both internationally and domestically. Its order book for international Transmission
is around 30% and for domestic is around 20%. The infra pipeline and railways
project in order book is around 6% . The JMC Project has around 44% share in the
order book. The well diversified order book provide the sufficient options to the
company to reduce the risk in this togh macroeconomic condition currently
prevailing in the country and Kalpataru power has done just enough to diversify the
risk.
TURNAROUND IN JMC PROJECTS AND INCREASED PRESENCE OVERSEAS
The JMC Projects of the company, which was lagging for the past few quarters due to
bad Job mix and high input costs can expect a turnaround after posting an impressive
performance in Q3FY14. The management's focus on improving margins in JMC
projects have started yielding results. The revenue from JMC grew by 9% YOY TO
Rs.1956 crore and its OPM is 4.9% for the December quarter. The operating profit
grew by 15% and PAT grew by 7% YOY. With new leaders in segment and complete
change in the high value F&B quality job and new projects in southern India helped
the company to perform better in the segment. KPTL increased its presence globally
by adding manufacturing capacities in US and it has currently 2 transmission BOOT
projects.
FINANCIAL VALUATION
KPTL is currently trading at the PE of 9.02x of its FY14E EPS of Rs. 8.78. Further
despite difficult macroeconomic condition we are expecting the company to
maintain the order inflow from both domestic and global markets. Apart from this,
the healthy order book position of the company, we expect it to register the healthy
growth in FY14and FY15. Further with healthy growth in SSL, likely margin expansion
in JMC projects and stable margin in Transmission and distribution business , we are
recommending the buy call for KTPL for the target of 110-120.
FINANCIAL STANDALONE
In the last five financial year (FY13-09), the top line of the KPTL has grown at the
annual CAGR rate of 11.8% while the operating profit of the company for the same
period grew at CAGR of 9.24%. However, due to capital being locked in the real
estate and BOOT projects the PAT of the company has suffered in the last year
otherwise it was growing at the CAGR rate of 11.8% for the four years after leaving
last year PAT. In FY 13, net sales of the company grew by 10.02% to 3286 crore over
FY12, the operating profit declined by 2.18% to 322 crore While due to high
depreciation the PAT of the company declined by 16.53% to 137.65 crore.
In Q3FY14 The net sales of the company grew by 18.38% to 1040.17 crore YOY &
10.03% QOQ, while operating profit of the company grew by 6.16% YOY & 3.19%
QOQ while PAT of the company declined by 4.07% to 33.70 crore, due to high
depreciation and increase in tax paid in last quarter YOY but on quarterly basis the
PAT grew by 8.74%. The operating margin (OPM) of the company declined by 53bps
QOQ to 8.94% and Profit after tax margin declined by 1bps QOQ to 3.21%
Mansukh Securities and Finance Ltd
Mansukh House, Plot No. 6, Opp. Mother Dairy Plant, Patparganj Road, Pandav Nagar,
New Delhi-110002, Phone: 91-11-30211800, 47617800, Fax: 011-30117710,
Email: [email protected], Website: www.moneysukh.com
SEBI Reg.No: BSE: INB 010985834, F&O: INF 010985834
NSE: INB 230781431, F&O: INF 230781431,
DP: IN-DP-CDSL-73-2000, IN-DP-NSDL-140-2000
MCX/TCM/CORP/0740 NCDEX/TCM/CORP/0293
Company
KALPATARU POWER TRANSMISSION LTD.
make more, for sure.
SEGMENT WISE ORDER BOOK
SWOT ANALYSIS
STRENGTHS
!
!
!
CONTINUOUS GROWTH IN SHREE SHUBHAM LOGISTICS (SSL)
HEALTHY AND WELL DIVERSIFIED ORDER BOOK POSITION
STABLE MARGINS IN JMC AND T&D BUSINESS
6%
20%
WEAKNESS
44%
!
!
!
CAPITAL LOCKED IN REAL ESTATE AND BOOT PROJECT FOR LONG TIME
LEGACY ORDERS IN RAILWAY AND PIPELINE PROJECTS AFFECT MARGINSS
DELAY IN COMMISIONING OF PROJECTS DUE TO COST PLUS REGIME
30%
OPPORTUNITIES
JMC
T&D Overseas
!
!
!
T&D Domestic
DIVERSITY IN GEOGRAPHICAL FOOTPRINT AND PRODUCT PORTFOLIO
FOCUSED PLANNING FOR SHORT AND LONG TERM PLANNING
USE OF HIGH PERFORMANCE CONDUCTORS IN EXISTING AND NEW LINES
THREATS
Infra & pipeline
!
!
!
RISE IN PRICE OF STEEL MAY AFFECT ITS MARGIN
ELECTION IN COUNTRY MAY STALL SOME OF ITS REAL ESTATE PROJECTS
AGGRESSIVE PRICING IN RAILWAY SEGMENT MAY TAKE TIME TO RECOVER
-
Mansukh Securities and Finance Ltd
Mansukh House, Plot No. 6, Opp. Mother Dairy Plant, Patparganj Road, Pandav Nagar,
New Delhi-110002, Phone: 91-11-30211800, 47617800, Fax: 011-30117710,
Email: [email protected], Website: www.moneysukh.com
SEBI Reg.No: BSE: INB 010985834, F&O: INF 010985834
NSE: INB 230781431, F&O: INF 230781431,
DP: IN-DP-CDSL-73-2000, IN-DP-NSDL-140-2000
MCX/TCM/CORP/0740 NCDEX/TCM/CORP/0293
Company
KALPATARU POWER TRANSMISSION LTD.
make more, for sure.
Financials - Standalone
QUARTERLY GROWTH
1200.00
1000.00
800.00
600.00
400.00
200.00
0.00
14Q3 14Q2 14Q1 13Q4 13Q3
Interest Earned
Operating Profit
Profit After Tax
QUATERLY GROWTH
201309 201306 201303 201212 201209 YOY
Net Sales
Other operating income
Total operating income
Total Expenditure
PBIDT (Excl OI)
PBIDTM %
Other Income
Operating Profit
Interest
Exceptional Item
PBDT
PBDTM
Depreciation
PBT
Profit after tax
PATM %
Calculated EPS INR
1040
11
1051
957
94
8.94
10
104
35
0
69
6.60
18
51
34
3.21
2.2
945
17
962
871
91
9.47
14
105
41
0
64
6.68
17
47
31
3.20
2.0
ANNUAL GROWTH
2014E
Net Sales
Other operating income
TotalOperating Income
Total Expenditure
PBIDT (Excl OI)
Other Income
Operating Profit
Interest
Exceptional Item
PBDT
Depreciation
PBT
Tax
Profit After Tax
Basic EPS INR
6832
53
53
6394
491
39
530
205
0
325
127
198
48
152
9.96
880
10
890
798
92
10.34
13
105
38
0
67
7.54
16
51
35
3.90
2.3
1012
20
1032
798
100
9.67
11
111
30
0
81
7.81
14
66
49
4.71
3.2
879
11
890
802
89
9.96
10
99
35
0
64
7.17
13
50
35
3.95
2.3
18
1
18
19
6
-10
4
6
1
0
9
-8
34
2
-4
-19
-4
2013
2012 2011 2010
2009
6036
49
6085
5611
474
36
510
194
0
316
122
194
60
134
8.44
5256
46
5302
4802
500
33
533
157
0
376
99
277
73
204
12.29
3244
15
3259
2939
320
22
343
115
0
228
58
170
42
128
41.87
ANNUAL GROWTH
8000
7000
6000
5000
4000
3000
2000
1000
0
2014E 2013 2012 2011 2010 2009
Net Sales
Operating Profit
Profit After Tax
Mansukh Securities and Finance Ltd
Mansukh House, Plot No. 6, Opp. Mother Dairy Plant, Patparganj Road, Pandav Nagar,
New Delhi-110002, Phone: 91-11-30211800, 47617800, Fax: 011-30117710,
Email: [email protected], Website: www.moneysukh.com
4322
41
4363
3899
464
31
495
117
0
379
88
291
79
211
13.13
4024
21
4044
3627
417
12
430
90
0
339
75
265
69
196
13.41
SEBI Reg.No: BSE: INB 010985834, F&O: INF 010985834
NSE: INB 230781431, F&O: INF 230781431,
DP: IN-DP-CDSL-73-2000, IN-DP-NSDL-140-2000
MCX/TCM/CORP/0740 NCDEX/TCM/CORP/0293
Company
KALPATARU POWER TRANSMISSION LTD.
make more, for sure.
NAME
DESIGNATION
E-MAIL
Varun Gupta
Head - Research
[email protected]
Mohit Taneja
Research Analyst
[email protected]
This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Mansukh
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Mansukh Securities and Finance Ltd
Mansukh House, Plot No. 6, Opp. Mother Dairy Plant, Patparganj Road, Pandav Nagar,
New Delhi-110002, Phone: 91-11-30211800, 47617800, Fax: 011-30117710,
Email: [email protected], Website: www.moneysukh.com
SEBI Regn
No.
BSE: BSE:
INB010985834
/ NSE:
INB230781431
SEBI
Reg.No:
INB 010985834,
F&O:
INF 010985834
PMSINF
Regn
No. INP000002387
NSE: INB 230781431, F&O:
230781431,
DP: IN-DP-CDSL-73-2000, IN-DP-NSDL-140-2000
MCX/TCM/CORP/0740 NCDEX/TCM/CORP/0293