PL Stock Report: Triveni Turbine (TRIV IN) - Q1FY24 Result Update - Outlook continues to remain healthy - Accumulate

Triveni Turbine (TRIV IN) - Amit Anwani - Research Analyst, Prabhudas Lilladher Pvt Ltd

Rating: ACCUMULATE | CMP: Rs398 | TP: Rs419

Q1FY24 Result Update - Outlook continues to remain healthy

Quick Pointers:

♦ Order inflows grew ~26.6% YoY to Rs4.5bn, aided by 43.3% YoY growth in aftermarket.

♦ Enquiry generation grew 22% YoY, mainly driven by domestic market (up 56% YoY).

Triveni Turbine (TRIV) reported revenue growth of 45.3% YoY, driven by aftermarket growth (up 90.8% YoY). Despite gross margin expansion of ~841bps YoY, EBITDA margin remained flat at 18.8%, due to sub-contracting charges related to refurbishment order in South Africa (SADC). Enquiry pipeline remains strong from domestic as well as exports market, thereby providing order inflow visibility. Domestic ordering activity is likely to improve from Q2FY24 (down 16% YoY in Q1FY24) given robust enquiry pipeline (up 56% YoY). API turbine is witnessing traction and likely to pick up its growth momentum, driven by increasing acceptance of TRIV as approved vendor globally. Aftermarket segment is likely to continue its growth momentum, mainly driven by refurbishment orders.

We believe TRIV is well placed to benefit from 1) continued strong inquiry pipeline (up 22% YoY) from domestic as well as exports market 2) strong market share (~50%) in domestic market (0-100MW), 3) traction from 30-100MW & API turbine, and 4) focus on aftermarket segment with strategy to penetrate into newer geographies for third party turbine refurbishment. We maintain ‘Accumulate’ rating on stock with revised TP of Rs419 (Rs416 earlier), valuing it at 37x FY25E (same as earlier).

Strong exports growth drives overall revenue growth: Consol sales came in better than estimates at Rs3.8bn (up 45.3% YoY; PLe ~Rs3.3bn). Domestic revenue grew ~20% YoY to Rs1.9bn and exports revenue grew ~88% YoY to Rs1.8bn. Gross margin expanded 841bps YoY to 51.5% in Q1FY24. EBITDA grew of 45.6% YoY to Rs709mn (PLe ~Rs633mn). Despite strong gross margin expansion, EBITDA margins remained flat YoY 18.8% in Q1FY24 (vs PL estimate of 19%), due to higher other expenses (up 143% YoY). Adj. PAT grew ~58.7% YoY to Rs607mn (PLe ~Rs506mn), led by healthy revenue growth and higher other income (up ~79% YoY to Rs134mn).

Strong order inflow growth of ~26.6% YoY, driven by exports markets: Order inflow grew 26.6% YoY to Rs4.5bn, driven by strong growth in exports market (up 128% YoY to Rs2.4bn), while domestic inflows declined 16% YoY to Rs2.1bn. Order book stands strong at Rs14bn (1x TTM revenue), comprising of domestic (57%) and exports (43%). Domestic market is likely to witness growth in ordering activity given strong growth in enquiry pipeline (up 56% YoY).

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