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KALPATARU POWER
 
  

 

SHARETIPSINFO >>Research Reports >>Kalpataru power>> (14-05-2013)

 

LISTING
CMP
Rs 80.25
52 WEEKS HIGH/LOW

Rs 105 /Rs 64

FACE VALUE
Rs 2
PE RATIO

8

MARKETCAP
Rs 1,218 crore
INDUSTY PE

15

FAIR VALUE
Rs 114

Theme of Investment –‘Government push to increase power generation capacity is positive for the company.’

COMPANY OVERVIEW:
Based at Gandhinagar Gujarat, Kalpataru Power is a leading Engineering, Procurement and Construction (EPC) 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. It has an annual installed capacity of 160,000 MTs for Towers with the commissioning of the new plant at Raipur. Kalpataru Power is in Power, Infrastructure, Asset Creation Power: Power Distribution, Green Power Generation, Power Plant Construction Company
Infrastructure: Pipe Line (Oil & Gas, Railways), Buildings & Factories, Road Bridges
Asset Creation: Transmission Systems, Roads, Logistics and warehouse.

Subsidiary JMC Project:
Kalapatru Power holds 67% stake in JMC Projects which is valued at Rs 134 crore. Order book at the end of Q3FY13 has been maintained at Rs 5,200 cr. Order inflow for the quarter was Rs. 660 cr, down 37.5% YoY and up 164% QoQ. JMC’s order book has remained flattish in the last 3-4 quarters. Its order inflow also witnessed a significant drop YoY, but improved sequentially. Order book at FY13 end is seen close to Rs 5,500-6,000 cr.

Order Book:

Standalone order book at the end of Q3FY13 stood at Rs6500 crore (up 18% YoY) and order inflow for the Quarter stood at Rs9.5bn. Order book break-up is 50% domestic and 50% international and ~70% of the order book is without any commodity and price risk.

EXPANSION PLANS:

It has continued to spread its wings by entering two new countries in international markets, namely Uganda and Armenia.

Order flows picked from both domestic and international costumers. Company has increased its share of Power Grid orders form 10% to 18% in FY13.

The company expects other businesses like railway and infrastructure to grow at ~12-15%.

OVERSEAS EXPANSION:

Kalpataru Power Transmission is exploring opportunities of setting up tower manufacturing plants in the US and Latin America. At present, the company is exporting towers to 18 countries to several EPC players in markets like Australia, USA, Latin America and Canada.

Recent Developments:

  1. Kalpataru Power, its unit bagged orders worth Rs 1,810 cr.
  2. Tano Capital to invest INR 800 million in Shree Shubham Logistics Limited (Subsidiary of Kalpataru Power Transmission Ltd.).

INDUSTRY OUTLOOK:

The power sector is critical to the economy and for the country to get back to a higher, 7% growth trajectory. There are some steps taken to address issues such as the restructuring of the SEBs, which are being discussed and agreed with the respective states. Coal shortage is expected to continue for some time till Coal India Ltd is able to ramp up production to meet domestic demand. In the interim, we have no choice but to import coal to bridge the gap.
Confident of resolving woes of the power sector, Union Minister Jyotiraditya Scindia says that the country's electricity generation capacity will leapfrog to nearly 315 gigawatts by fiscal year 2016-17 with an estimated investment of about Rs five lakh crore.
The target is to take the generation capacity further to 315 gigawatts (315,000 MW) by the end of the 12th Five-Year Plan period ending in fiscal 2016-17.

INVESTMENT RATIONAL:

  1. Further expansion of its geographic reach to other countries.
  2. EPC skills to enter into other related business railway and Infrastructure

Risk:

  1. Any delay in the execution of the projects.
  2. Slowdown in the order inflows.

TREND OF SHAREHOLDING PATTERN IN LAST 3 QUARTER:

Q4FY13

Q3FY13

Q2FY13

PROMOTERS

57.77%

57.71%

57.52%

FII

11.10%

11.21%

10.89%

DII

23.05%

23.74%

23.96%

Comment:
Promoters have marginally increased stake in the company. Also FIIs have also increased stake in the company.

FINANCIAL:

FY12

FY11

FY10

FY09

TOTAL INCOME

3084

2925

2630

1913

EXPENDITURE

-2704

-2542

-2292

-1676.67

PBIDTA

380

383

338

236.33

DEPRECIATION

-48

-45.93

-38.24

-27.32

PBIT

332

337.07

299.76

209.01

INTEREST

-108.25

-80.15

-72.25

-88.69

PBT

223.75

256.92

227.51

120.32

TAX

-59

-66

-57.14

-26.17

PAT

164.75

190.92

170.37

94.15

Key Highlights:

  1. Total Income grew at CAGR of 17% in the last 4 years to Rs 3084 cr.
  2. PBIDTA grew at CAGR of 17% in the last 4 years to Rs 380 cr.
  3. PAT grew at CAGR of 20.25% in last 4 years to Rs 165 cr.

RATIOS:

FY12

F11

FY10

FY09

EPS

10.73

12.44

11.10

6.13

PBIDTA MARGIN

12.32

13.09

12.8

12.35

NPM

5.34

6.52

6.4

4.92

INTEREST COVER

23.71

25.92

49.96

15.48

 
Key Highlights:

  1. EPS grew at 20.25% in the last 4 years to Rs 10.75.
  2. PBITDA Margin remained stable at 12.35% during the period.
  3. NPM improved by 42 bps during the last 4 years.
  4. Interest cover also increased to 23.7 from 15.5.

COMPARISION OF Q3FY2013 WITH Q3FY2013:

Q3FY13

Q3FY12

% CHANGE

TOTAL INCOME

899.62

812.3

10.74

EXPENDITURE

-801.1

-710

PBIDTA

98.52

102.3

-3.69

DEPRECIATION

-13.47

-12.12

PBIT

85.05

90.18

-5.68

INTEREST

-34.73

-33.45

PBT

50.32

56.73

-11.29

TAX

-15.2

-16.45

PAT

35.12

40.28

-12.81

Key Highlights:

  1. Total Income grew by 10.75% to Rs 899 cr during Q3FY13 (YoY).
  2. PBIDTA showed slight downside in Q3FY13 by -3.7% to Rs 98 cr (YoY).
  3. PAT declined by 12.8% to Rs 35.1 during Q3FY13 to Rs 35 cr (YoY.

VALUATION &OUTLOOK:
We expect FY14E EPS of Rs 12.7. Stock is trading at 6.3 X to FY14E EPS. We value the company at 9X to FY14E EPS, the fair value come at Rs 114.
Downside of the stocks is limited. Negative in the sector is discounted. We feel stock provide an potential upside.

CONCLUSION:
Fair Value of the stocks is Rs 114. Investors with 6-8 month time can take position on the counter. The upside potential is 40%.

 

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