PL Stock Report: Triveni Turbine (TRIV IN) - Q2FY24 Result Update – Healthy beat on all fronts; outlook remains intact - Accumulate

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

Rating: ACCUMULATE | CMP: Rs392 | TP: Rs450

Q2FY24 Result Update – Healthy beat on all fronts; outlook remains intact

Quick Pointers:

♦ Order inflows came in at Rs4.6bn (up 27.2% YoY), aided by 40.8% YoY growth in domestic orders to Rs2.6bn.

♦ Order book stands at a record high of Rs14.8bn with enquiry pipeline up ~33% YoY in H1FY24.

Triveni Turbine (TRIV) reported revenue growth of 32.4% YoY, driven by strong aftermarket sales (up 71.4% YoY). EBITDA margin continued to remain flattish despite gross margin improvement, due to high sub-contracting expenses in SADC and increase in international travel expenses. Domestic enquiry pipeline is robust owing to pick up in Cement sector and resilience in Steel and Distilleries. International demand is coming from the Americas, Europe, and South East Asia, in areas such as independent power plants, process co-generation, and biomass. There is good traction in the aftermarket segment, particularly in upgradation & automation, with the company expanding its international service offerings to drive growth. TRIV will continue to add skilled manpower to improve its R&D capabilities for quality enhancement and new product development, with focus on capturing higher value orders.

We believe TRIV’s prospects continue to remain strong due to 1) healthy enquiry pipeline (up 33% YoY) across markets, 2) growing share of higher margin exports and aftermarket sales, 3) strong traction in both industrial and API drive turbines, and 4) robust order book with strong inflows across its businesses. Due to the recent run-up in the stock price, we maintain an ‘Accumulate’ rating on the stock and roll forward to Sep-25E with a revised TP of Rs450 (Rs419 earlier), valuing it at 35x Sep-25E (37x FY25E earlier).

Robust growth in aftermarket segment drives overall revenue growth: Consolidated sales came in better than estimates at Rs3.9bn (up 32.4% YoY; PLe ~Rs3.7bn), driven by 71.4% YoY growth in aftermarket sales to Rs1.2bn. Domestic revenue grew 29.3% YoY to Rs2.1bn while exports grew 36.3% YoY to Rs1.8bn. Gross margin expanded by 241bps YoY to 49.1% in Q2FY24. EBITDA grew 33.6% YoY to Rs744mn (PLe ~Rs686mn), with EBITDA margin largely flat YoY at 19.2% (vs 19.0% in Q2FY23) due to a 51.5% YoY jump in other expenses (up 248bps as a % of sales). Adj. PAT grew 39.0% YoY to Rs642mn (PLe ~Rs568mn), supplemented by higher other income (up 35.1% YoY to Rs146mn).

Record high order book of Rs14.8bn, boosted by healthy domestic inflows: Order inflow in Q2FY24 grew 27.2% YoY to Rs4.6bn, driven by strong growth in domestic orders (up 40.8% YoY to Rs2.6bn). Aftermarket order inflow rose 72.8% YoY to Rs1.5bn, accounting for ~33% of total inflows (up from ~25% in Q2FY23). Order book stands at a record high of Rs14.8bn (1x TTM revenue), with domestic accounting for ~57% and exports ~43%. Enquiry pipeline in H1FY24 grew ~33% YoY, with the domestic enquiry book jumping ~100% YoY owing to strong traction in cement, steel, process co-generation, and distilleries.

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