VISIT NOTE KALPATARU POWER - Moneycontrol.comstatic-news.moneycontrol.com/static-mcnews/2017/09/... · strategy to venture in new international markets and healthy ... in MP Kalpataru

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Edelweiss Securities Limited

Our recent interaction with Mr. Manish Mohnot, MD & CEO, Kalpataru Power (KPP), bolstered our conviction in the company’s strong earnings visibility over the near to medium term. Key highlights: 1) burgeoning prospects in domestic railways electrification jobs (INR100-120bn p.a. market) likely to be key growth driver (70% CAGR over FY17-19E, albeit on low base); 2) international markets to drive T&D business; and 3) FY18 to be the last year of any major equity infusion to fund losses in road BOOT projects. We revise our TP to INR480 (earlier INR395) factoring: a) 5% upwards revision in FY19E EPS due to higher growth in railways; and b) upwards revision of our core P/E multiple to 16x (14x earlier) to factor in improving business prospects. Additionally, we perceive potential value unlocking from sale of real estate projects, road assets and Shubham Logistics, which could spur further rerating. Maintain ‘BUY’.

Expanding railways opportunity to spur exponential growth

Broadly, two thirds of railways’ humongous network of 70K kms is still not electrified, a

big huge opportunity for KPP, KEC, L&T, etc. Moreover, the improved ordering

prospects get further boost with PGCIL joining CORE and RUVNL in electrification

programme. In this backdrop, we estimate ~6-8K km of ordering p.a. over the next 4-5

years. With current order book at INR17bn (including INR7bn L1), KPP is anticipating

exponential growth in the railways business (60% CAGR over FY17-19) with margin at

10% plus and management expects its revenue contribution to double to 20%.

JMC gaining traction; Shubham logistics (SSL) getting back on track

JMC Projects’ (JMC) revenue has been stagnant over FY13-17 primarily due to weak

pipeline in private residential projects and government infra projects. However, its

strategy to venture in new international markets and healthy traction in public infra

projects has enhanced revenue visibility to ~3x FY17 revenue. SSL is gradually returning

on track and equity infusion is on the anvil to fund losses (INR1bn over FY17 & FY18).

Outlook and valuations: Healthy growth ahead; maintain ‘BUY’

With revenue visibility of ~2x and structural drivers in place to spur railways and oil &

gas pipeline spending, KPP is ideally placed to clock 23% plus EPS CAGR over FY17-19E;

we maintain ‘BUY/SO’.

VISIT NOTE

KALPATARU POWER Growth catalysts in place; rerating potential

COMPANYNAME

EDELWEISS 4D RATINGS

Absolute Rating BUY

Rating Relative to Sector Outperform

Risk Rating Relative to Sector Medium

Sector Relative to Market Overweight

MARKET DATA (R: KAPT.BO, B: KPP IN)

CMP : INR 355

Target Price : INR 480

52-week range (INR) : 405 / 207

Share in issue (mn) : 153.5

M cap (INR bn/USD mn) : 54 / 842

Avg. Daily Vol.BSE/NSE(‘000) : 130.9

SHARE HOLDING PATTERN (%)

Current Q4FY17 Q3FY17

Promoters *

59.3 59.5 59.5

MF's, FI's & BK’s 18.6 18.3 21.7

FII's 6.7 7.2 6.1

Others 15.3 15.0 12.8

* Promoters pledged shares (% of share in issue)

: 6.0

PRICE PERFORMANCE (%)

Stock Nifty

EW Capital Goods Index

1 month 0.0 3.0 5.1

3 months 2.4 5.3 3.9

12 months 34.7 15.4 21.5

Swarnim Maheshwari +91 22 4040 7418

[email protected]

Amit Mahawar +91 22 4040 7451

[email protected]

India Equity Research| Engineering and Capital Goods

September 18, 2017

Financials

Year to March FY16 FY17 FY18E FY19E

Revenues (INR mn) 43,646 48,941 57,028 68,850

Rev. growth (%) (1.3) 12.1 16.5 20.7

EBITDA (INR mn) 4,669 5,291 6,259 7,607

Net profit (INR mn) 1,995 2,691 3,317 4,172

EPS (INR) 13.0 17.5 21.6 27.2

EPS growth (%) 20.5 34.9 23.3 25.7

Diluted P/E (x) 27.1 20.1 16.3 13.0

ROE (%) 9.3 11.5 12.6 14.0

Engineering and Capital Goods

2 Edelweiss Securities Limited

Huge railways opportunity: To be key growth driver

India has a huge railway network (~67,000 route kms or rkm), of which only 40% is

electrified. Railways has been a major thrust area for the Modi government, which includes

enhancing capacity, improving speed & safety and efficiency by electrification of existing

network. Electrification jobs were awarded by Central Organisation for Railway

Electrification (CORE) and Rail Vikas Nigam (RVNL) so far. In order to give impetus to

electrification jobs, the government has recently appointed PGCIL as well to enhance the

pace of work. PGCIL, in its first order itself, awarded ~800km recently. Moreover, it enjoys

excellent reputation amongst contractors due to its prompt payment services. Overall, the

total opportunity size for network electrification stands at ~INR550-600bn.

Chart 1: Growth in railway electrification

Source: Indian Railways Green Energy Initiatives, Edelweiss research

From average electrification of ~1,500rkm per annum (FY17: 2,500rkm) over the previous

decade, we estimate average annual awarding to jump to ~6,000-8,000rkm, implying an

opportunity size of INR100-120bn per annum over the next 3-4 years. We envisage KPP to

be a major beneficiary on account of this and we estimate the company to garner 10-15%

market share. Moreover, the track laying & infra business is also expected to contribute to

the expanding railways business. Management indicated that margin in the railways

business has already converged with T&D margin of 10-11%. Hence, we expect KPP’s railway

business to post 70% CAGR over the next 2 years, albeit on a low base, clocking INR10bn

sales by FY19E.

0

1800

3600

5400

7200

9000

15,000

22,000

29,000

36,000

43,000

50,000

FY1

1

FY1

2

FY1

3

FY1

4

FY1

5

FY1

6

FY1

7

FY1

8E

FY1

9E

(RK

M)

(RK

M)

Unelectrified Railway lines Railway electrification (RHS)

3x jump in electrificationexpected

Kalpataru Power


Chart 2: Our estimate of KPP’s growth in railways business

Source: Company, Edelweiss research

Domestic T&D growth could moderate; exports to sustain traction

Though investments in the transmission sector have surged, they have significantly lagged

those in the generation sector. However, with the government sharpening focus on

alleviating congestion via several grid enhancement projects, transmission capacities are

expected to clock robust growth. Over FY17-21, investments in the transmission segment

are expected to jump 1.5x compared to FY12-16 to a whopping INR3.1-3.2tn (55% on intra

state). We estimate ~INR0.9tn of projects to be awarded on tariff based competitive bidding

(TBCB) basis, an opportunity for the private sector, though PGCIL also bids under this mode.

This implies that PGCIL’s capex could be topping out at ~INR250bn over the next 2-3 years,

though SEBs and private capex could pick up but overall domestic T&D growth could

moderate to 8-10% levels from 15% earlier. KPP is scouting for SEB projects on selective

basis, particularly working capital cycle being one of the major criteria. It is predominantly

gaining traction from domestic SEBs, mainly from TN, Karnataka, WB, UP, Bihar and private

BOT. On the international front (40% of overall OB), KPP is gaining good traction in Africa.

Chart 3: PGCIL—Capex trend

Source: PGCIL, Edelweiss research

25.0

40.0

55.0

70.0

85.0

100.0

0.0

2.4

4.8

7.2

9.6

12.0

FY17 FY18E FY19E

(%)

(IN

R b

n)

Railway revenues Revenue growth (%)

Expect 70% CAGR albeit on a small base

0

70

140

210

280

350

FY0

9

FY1

0

FY1

1

FY1

2

FY1

3

FY1

4

FY1

5

FY1

6

FY1

7

FY1

8E

FY1

9E

(IN

R b

n)

PGCIL awarded tenders

http://www.irgreenri.gov.in/tile_elect.html



KPP’s strategy on transmission BOOT projects is to build and own one transmission asset

every year with a project size of ~INR7-8bn (including JV partner). It now owns 3

transmission assets with fourth asset recently won.

Table 1: Transmission BOOT assets details

Source: Company

SSL business: Normalcy to return gradually

SSL is gradually coming out of the slump post battling multiple issues: 1) multiple exits at the

top management triggering operational issues; and 2) low utilisation of its warehouses and

indulging in trading activities. The top management has been successfully restructured and

the company has now decided to only focus on warehousing business & allied activities

instead of indulging in trading & arbitrage activities. Post incurring a loss of INR0.75bn in

FY17, SSL is estimating PAT loss of INR0.4bn in FY18 primarily on account of INR4bn debt,

though margin is back to double digits. While we do not expect any significant growth in this

business over FY17-19, we estimate SSL to break even at the PAT level by FY19. Until then,

funding of losses will be crucial. Any potent value unlocking via stake sale or business sale is

a key monitorable.

Chart 4: SSL financial performance


Projects Model Project Scope SPV ownership

Project Cost

(INR bn)

Concession

Period Current Status

Completion

date

Jhajjar KT

Transco

Annuity

based

400 kv/220 kv transmission

line of 100kms in Haryana

Kalpataru Power -

51% & Techno

electric - 49%

4.5 25 yrs.+ 10 yrs.

extendable

Generating

revenue of INR

540Mnpa

Commenced in

March 2012

Kalpataru

Satpura Transco

Annuity

based

400 kv Satpura–Ashta DCDS

transmission line of 240 kms

in MP

Kalpataru Power -

100%

3.4 25 yrs.+ 10 yrs.

extendable

Generating

revenue of INR

380Mnpa

Commenced in

April 2015

Alipurduar

Transmission

Annuity

based

Transmission system for

transfer of power from new

hydro electric power projects

in Bhutan on BOOM basis

Kalpataru Power -

100%

11.5 35 Yrs Under

Development,

Achieved

financial closure

FY19

Kohima Mariani

Transmission

Annuity

based

Transmission system for North

Eastern Region Strengthening

Scheme (NERSS VI) on BOOM

basis

To be finalised To be

finalised

35 Yrs SPV Acquired Early FY21

(900)

(600)

(300)

0

300

600

FY1

3

FY1

4

FY1

5

FY1

6

FY1

7

FY1

8E

FY1

9E

(IN

R m

n)

SSL PAT SSL Interest

Interest cost is expected to decline with the decline in debt.

Kalpataru Power


JMC Projects swings into action; promising growth rate

JMC has created a niche for itself in the B&F segment in the South India market and has

established a strong brand among end customers (retail home buyers) by dint of quality

work and timely execution, rendering it the preferred construction partner for private real

estate developers. The share of B&F in the overall order backlog has catapulted to 75% in

FY17 from 47% in FY10, as the company has strengthened its capabilities in the segment. In

B&F, while the share of private real estate projects stands at 70%, government projects

contribute 30% (up 2x in past 2 years).

JMC has not seen any revenue growth over FY13-17 mainly due to weak pipeline in private

residential projects and government infra projects. The company’s strategy to venture in

new international markets (Ethiopia, Sri Lanka, etc) and strong traction in public infra

projects along with B&F segment projects has catapulted revenue visibility to ~3x FY17

revenue, with an order backlog of INR70bn (25% CAGR over past 3 years). Hence, we expect

20% revenue CAGR with stable margin and 20% EPS CAGR over FY17-19E.

Chart 5: Our estimate of JMC’s growth

Source: Company

Road BOOT projects still in losses; traffic growth improving

JMC has a BOOT road asset portfolio comprising 4 projects—Rohtak-Bawal, Agra-Aligarh,

Nagpur-Wainganga and Rewa MP/UP border. All the projects are operating on full length

and full toll basis, of which 3 road assets belong to NHAI and 1 to MPRDC. The current

INR0.52mn per day toll collection on road projects is insufficient to fund operational

expenses. Cash break even is expected at ~INR0.6mn, which implies traffic growth of ~7%

from current 3-4%. The company is expected to fund losses of ~INR0.5bn in FY18 and

expects minimal funding in FY19.

We believe this is another area of value unlocking for shareholders and while the company

has not stated any plan to exit, we believe its absence in recent road projects’ bidding could

be taken as a hint. Complete exit depends on valuations as well.

4.0

6.0

8.0

10.0

12.0

14.0

20

22

24

26

28

30

FY13 FY14 FY15 FY16 FY17 FY18E FY19E

(%)

(IN

R b

n)

Revenue (INR bn) EBITDA Margins

Revenues have been stagnant for last 5 yrs RevenueCAGR -13% (FY17-19E)



Table 2: Summary of current road BOOT projects

Source: Company

Outlook and valuations: Strong growth ahead; maintain ‘BUY’

KPP is envisaged to be key beneficiary of improving railways capex on electrification & track

laying and infra projects over the next 2-3 years, with total opportunity of INR100-120bn per

annum (from INR25bn). The other businesses, namely, T&D and pipeline, are in fine fettle

and are expected to grow at around 10%. With revenue visibility of ~2x and structural

drivers in place to spur railways and oil & gas pipeline spending, KPP is strongly positioned

to clock 20% plus EPS CAGR over FY17-19E.

Over the past 6 months, a significant valuation gap has developed between KPP and KEC

with the latter trading at ~19-20x 1-year forward and KPP trading in the ~12-13x valuation

range. This is unprecedented as KPP always commanded a premium over KEC. In our view,

the gap is due to: 1) KEC’s better delivery in terms of profitability versus guidance; 2)

significant growth in KEC’s order book wherein one of the major drivers was railways; and 3)

higher RoE of ~20% versus KPP’s ~15%, primarily due to high leverage multiplier in case of

KEC, though RoCE remains similar for both companies. We argue that for a company with

similar growth opportunities and earnings trajectory (25% EPS growth over FY17-19), a

valuation gap of 35-40% is unjustified. Hence, we raise KPP’s target multiple to 16x from

14x. We further increase our FY19E EPS 4% to factor in improving earnings trajectory on

account of the railways business. Our new SOTP-based TP is INR475 (earlier INR395).

Chart 6: PE band comparison of KEC International and Kalpataru Power

Source: Bloomberg, Company

Project SPV Client KmsCost of project

(INR bn)

Equity

(INR bn)

Debt

(INR bn)

Prem./(Grant)

(INR mn)

Concession

Period (Yrs)

Appointed

Date

Whether breakeven

achieved

Rohtak Bawal Kurukshetra

Expressway

NHAI 83 10.35 2.4 7.9 120 28 May-11 Yes

Agra Aligarh Brijbhoomi

Expressway

NHAI 79 2.65 0.5 1.6 -500 15 Oct-12 No

Nagpur Wainganga Wainganga

Expressway

NHAI 45 4.5 1.2 3.3 300 18 Apr-12 No

Rewa MP/UP BorderVindhyachal

Expressway

MPRDC 89 6.9 1.9 5 400 27 Feb-13 Yes

8.5

11.1

13.7

16.3

18.9

21.5

Jun

-14

Au

g-1

4

Oct

-14

De

c-1

4

Feb

-15

Ap

r-1

5

Jun

-15

Au

g-1

5

Oct

-15

De

c-1

5

Feb

-16

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

De

c-1

6

Feb

-17

Ap

r-1

7

Jun

-17

Au

g-1

7

(X)

Kalpataru PE KEC PE

40% valuation gap is unjustified in our

view

Kalpataru Power


Chart 7: ROCE profile of KPP and KEC Chart 8: ROE profile of KPP and KEC

Source: Company

Table 3: Valuation comparisons between Kalpataru and KEC


10.0

13.0

16.0

19.0

22.0

25.0

FY1

4

FY1

5

FY1

6

FY1

7

FY1

8E

FY1

9E

(%)

Kalpataru ROCE KEC ROCE

ROCE profile is broadly similar at

around 20% levels

Kalpataru KEC Kalpataru KEC

Revenue CAGR (%) 10.0 8.1 18.6 15.9

Average Margins (%) 10.2 7.3 10.9 9.5

Interest as a % of EBITDA 0.3 0.4 0.2 0.3

PAT CAGR (%) 10.3 7.9 24.5 19.6

ROE (%) 9.0 13.1 12.7 20.8

ROCE (%) 15.1 16.6 18.5 21.1

Revenue Visilibity (x) 1.8 1.4 2.1 1.5

FY12-17 FY17-19E

0.0

5.0

10.0

15.0

20.0

25.0

FY1

4

FY1

5

FY1

6

FY1

7

FY1

8E

FY1

9E

(%)

Kalpataru ROE KEC ROE

KEC's higher ROE is on account of high leverage multiplier



Table 4: SOTP based target price


Kalpataru standalone

Valuation Methodology P/E

PAT - FY19E (INR mn) 4,172

Multiple (x) 16

Implied value (INR mn) 66,745

No of shares 154

Value per share (INR) 435

JMC SA (67% stake)


PAT - FY19E (INR mn) 862

Multiple (x) 10.0

Implied value (INR mn) 5,792

No of shares - KPP 154

Value per share (INR) for KPP 38

Value per share after Hold Co. dis@20% (INR) 30

JMC Road BOT projects

Valuation Methodology 1x P/BV

Equity Invested (INR mn) 5,000

Value per share (INR) for Kalpataru Power 22

Value per share after Hold Co. discount @30% (INR) 15

KPTL transmission BOT projects

Valuation Methodology DCF valuation

NPV 845

No of shares 154

Value per share (INR) 6

Shree Shubham Logistics - 80% stake


PAT - FY19E (INR mn) (105)

Multiple (x) 10.0

Implied value (INR mn) (838)

No of shares 154

Value per share (INR) (5)

Total value 480.3

Kalpataru Power


Company Description

KPTL is amongst the largest players in power transmission, oil & gas pipeline and railways

infrastructure EPC space with footprints in over 40 countries. KPTL is part of the Kalpataru

Group, a diversified conglomerate spanning Real Estate, Power Generation and

Transmission, Construction of Roads, Factories, Buildings and Oil and Gas Infrastructure and

Agri-Logistics spaces and has experience of over 3 decades. It had successfully developed a

portfolio of transmission line DBFOT/BOOM projects (PPP model). KPP is exposed to

construction segment with a 67% stake in JMC Projects (JMC); JMC is a full-scale

infrastructure EPC player in all verticals viz. Buildings & factory, Roads & Flyovers, Water &

Railways, Industrial and Power BOP. It is also in the logistics business with 72% stake in

Shree Shubham Logistics (SSL) which manages and operates warehouses across the states of

Rajasthan, Gujarat, Madhya Pradesh and Maharashtra

Investment Theme

We envisage KPP to be a major beneficiary on account of jump in the average electrification

~6,000-8,000rkm from ~1,500rkm per annum (FY17: 2,500rkm) over the previous decade,

implying an opportunity size of INR100-120bn per annum over the next 3-4 years and we

estimate the company to garner 10-15% market share.

With the investments in the transmission segment expected to jump 1.5x over FY17-21,

compared to FY12-16 to a whopping INR3.1-3.2tn and thus PGCIL’s capex could be topping

out at ~INR250bn over the next 2-3 years, though SEBs, we expect KPP to gain traction from

domestic SEBs, mainly from TN, Karnataka, WB, UP, Bihar and private BOT.

With revenue visibility of ~2x and structural drivers in place to spur railways and oil & gas

pipeline spending, KPP is strongly positioned to clock 20% plus EPS CAGR over FY17-19E.

Key Risks

Power T&D investments are executed by state utilities, which, in turn, are mandated by the

government. Hence, any change in the political environment can potentially impact the pace

of execution in the industry, thus impacting the timing of revenue growth.

Additionally, customer concentration risk is high in the business, which in turn, impacts the

bargaining power of transmission tower companies.



Financial Statements-SA

Income statement (INR mn)


Income from operations 43,646 48,941 57,028 68,850

Materials costs 30,656 34,305 39,561 47,712

Employee costs 2,932 2,918 3,833 4,627

Other mfg expenses 5,390 6,427 7,375 8,904

Total operating expenses 38,977 43,649 50,770 61,243

EBITDA 4,669 5,291 6,259 7,607

Depreciation 837 777 765 805

EBIT 3,832 4,514 5,494 6,801

Add: Other income 508.1 493.4 428.9 525.7

Less: Interest Expense 1,275 982 934 1,054

Profit Before Tax 3,065 4,026 4,989 6,273

Less: Provision for Tax 1,070 1,335 1,671 2,101

Reported Profit 1,995 2,691 3,317 4,172

Adjusted Profit 1,995 2,691 3,317 4,172

Shares o /s (mn) 153 153 153 153

Adjusted Basic EPS 13.0 17.5 21.6 27.2

Diluted shares o/s (mn) 154 154 154 154

Adjusted Diluted EPS 13.0 17.5 21.6 27.2

Adjusted Cash EPS 18.1 22.6 26.6 32.4

Dividend per share (DPS) 3.5 3.5 3.5 3.5

Dividend Payout Ratio(%) 31.4 23.3 18.9 15.0

Common size metrics


Operating expenses 89.3 89.2 89.0 89.0

Materials costs 70.2 70.1 69.4 69.3

Staff costs 6.7 6.0 6.7 6.7

Other mfg expenses 12.3 13.1 12.9 12.9

Depreciation 1.9 1.6 1.3 1.2

Interest Expense 2.9 2.0 1.6 1.5

EBITDA margins 10.7 10.8 11.0 11.0

Net Profit margins 4.6 5.5 5.8 6.1

Growth ratios (%)


Revenues (1.3) 12.1 16.5 20.7

EBITDA 9.4 13.3 18.3 21.5

Adjusted Profit 20.5 34.9 23.3 25.7

EPS 20.5 34.9 23.3 25.7

Key Assumptions


Macro

GDP(Y-o-Y %) 7.2 6.5 7.1 7.7

Inflation (Avg) 4.9 4.5 4.0 4.5

Repo rate (exit rate) 6.8 6.3 5.8 5.8

USD/INR (Avg) 65.0 67.5 66.0 66.0

Company

KPP SA Order intake (%) 184.4 (16.6) 23.6 13.1

JM order intake (%) (2.0) 3.0 5.0 10.0

KPP SA sales growth (%) (1.3) 12.1 16.5 20.7

JMC sales growth (%) 7.0 (6.1) 15.6 10.0

Excise duty as % of rev 2.0 2.0 2.0 2.0

Tax rate (%) 34.9 33.2 33.5 33.5


Kalpataru Power

Peer comparison valuation

Market cap Diluted P/E (X) P/B (X) ROAE (%)

Name (USD mn) FY18E FY19E FY18E FY19E FY18E FY19E

Kalpataru Power 842 16.3 12.9 1.9 1.7 12.6 14.0

KEC International 1,282 23.0 18.9 4.3 3.6 20.4 20.7

Median 19.7 15.9 3.1 2.6 16.5 17.4

AVERAGE 19.7 15.9 3.1 2.6 16.5 17.4

Source: Edelweiss research

Cash flow metrics


Operating cash flow 7,555 3,217 2,927 2,723

Investing cash flow (1,679) (2,114) (620) (620)

Financing cash flow (5,547) (31) 678 662

Net cash Flow 329 1,072 2,984 2,766

Capex (949) (576) (620) (620)

Dividend paid (549) - (322) (338)

Profitability and efficiency ratios


ROAE (%) 9.3 11.5 12.6 14.0

ROACE (%) 15.1 17.3 18.3 20.0

Inventory Days 61 47 47 48

Debtors Days 171 192 185 172

Payable Days 194 191 176 155

Cash Conversion Cycle 38 48 56 65

Current Ratio 1.7 1.6 1.7 1.7

Gross Debt/EBITDA 1.2 1.0 1.0 1.0

Gross Debt/Equity 0.3 0.2 0.2 0.2

Adjusted Debt/Equity 0.3 0.2 0.2 0.2

Net Debt/Equity 0.2 0.1 0.1 -

Interest Coverage Ratio 3.0 4.6 5.9 6.5

Operating ratios


Total Asset Turnover 1.5 1.7 1.8 1.9

Fixed Asset Turnover 8.0 9.2 11.1 13.9

Equity Turnover 2.0 2.1 2.2 2.3

Valuation parameters


Adj. Diluted EPS (INR) 13.0 17.5 21.6 27.2

Y-o-Y growth (%) 20.5 34.9 23.3 25.7

Adjusted Cash EPS (INR) 18.1 22.6 26.6 32.4

Diluted P/E (x) 27.0 20.1 16.3 12.9

P/B (x) 2.4 2.2 1.9 1.7

EV / Sales (x) 1.3 1.2 1.0 0.8

EV / EBITDA (x) 12.5 10.8 8.8 7.0

Dividend Yield (%) 1.0 1.0 1.0 1.0

Balance sheet (INR mn)

As on 31st March FY16 FY17 FY18E FY19E

Share capital 307 307 307 307

Reserves & Surplus 21,842 24,480 27,475 31,309

Shareholders' funds 22,149 24,787 27,782 31,616

Short term borrowings 2,870 2,315 3,315 4,315

Long term borrowings 2,716 3,211 3,211 3,211

Total Borrowings 5,586 5,526 6,526 7,526

Long Term Liabilities 594 597 597 597

Def. Tax Liability (net) (314) (538) (537) (537)

Sources of funds 28,015 30,372 34,368 39,203

Gross Block 10,297 10,901 11,511 12,121

Net Block 5,384 5,210 5,055 4,859

Capital work in progress 41 26 36 46

Total Fixed Assets 5,426 5,236 5,091 4,906

Non current investments 5,178 7,160 7,160 7,160

Cash and Equivalents 1,066 2,110 5,095 7,860

Inventories 4,244 4,542 5,717 6,786

Sundry Debtors 23,046 28,480 29,434 35,536

Loans & Advances 5,388 5,507 5,783 6,072

Other Current Assets 7,788 7,424 7,573 7,724

Current Assets (ex cash) 40,465 45,953 48,507 56,118

Trade payable 16,610 19,271 18,968 21,568

Other Current Liab 7,509 10,816 12,517 15,274

Total Current Liab 24,120 30,087 31,484 36,842

Net Curr Assets-ex cash 16,346 15,867 17,022 19,276

Uses of funds 28,015 30,372 34,368 39,203

BVPS (INR) 144.3 161.5 181.0 206.0

Free cash flow (INR mn)


Reported Profit 1,924 2,691 3,317 4,172

Add: Depreciation 837 777 765 805

Interest (Net of Tax) 830 656 621 701

Others (101) (193) (621) (701)

Less: Changes in WC (4,065) 714 1,156 2,254

Operating cash flow 7,555 3,217 2,927 2,723

Less: Capex 949 576 620 620

Free Cash Flow 6,606 2,641 2,307 2,103



Insider Trades

Reporting Data Acquired / Seller B/S Qty Traded

No Data Available

*in last one year

Bulk Deals Data Acquired / Seller B/S Qty Traded Price

03 Oct 2016 Hsbc Global Investment Fu Nds Mauritius Ltd Sell 1682208 260.00

03 Oct 2016 Hsbc Global Investment Funds Indian Equity Buy 1682208 260.00

*in last one year

Holding – Top10 Perc. Holding Perc. Holding

Kalpataru constructi 15.22 K c holdings pvt ltd 13.78

Kalpataru properties 8.89 Munot parag mofatraj 8.77

Hdfc asset managemen 8.71 Munot mofatraj pukha 7.43

Hsbc 3.08 Hsbc global inv maur 2.88

Icici prudential lif 2.59 Dsp blackrock invest 2.4

*in last one year

Additional Data

Directors Data Mofatraj P Munot Chairman Manish Mohnot Managing Director

S P Talwar Non Executive Independent Director Mahendra G Punatar Non Executive Independent Director

Narayan Seshadri Non Executive Independent Director Sajjanraj Mehta Non Executive Independent Director

Vimal Bhandari Non Executive Independent Director K V Mani Non Executive Director

Parag Munot Promoter - Director

Auditors - M/s. Deloitte Haskins & Sells

*as per last annual report



Company Absolute

reco

Relative

reco

Relative

risk

Company Absolute

reco

Relative

reco

Relative

Risk

ABB India BUY SO L Bharat Forge BUY SO M

Bharat Heavy Electricals BUY SO M CG Power and Industrial Solutions HOLD SP M

Cummins India BUY SO L Engineers India Ltd BUY SO L

Greaves Cotton HOLD SP M Kalpataru Power BUY SO M

KEC International BUY SP M Larsen & Toubro BUY SO M

Praj Industries BUY None None Ramkrishna Forgings BUY SP M

Siemens HOLD SP L TD Power Systems HOLD None None

Techno Electric & Engineering BUY SO M Thermax REDUCE SP L

Triveni Turbine BUY None None VA Tech Wabag BUY None None

RATING & INTERPRETATION

ABSOLUTE RATING

Ratings Expected absolute returns over 12 months

Buy More than 15%

Hold Between 15% and - 5%

Reduce Less than -5%

RELATIVE RETURNS RATING

Ratings Criteria

Sector Outperformer (SO) Stock return > 1.25 x Sector return

Sector Performer (SP) Stock return > 0.75 x Sector return

Stock return < 1.25 x Sector return

Sector Underperformer (SU) Stock return < 0.75 x Sector return

Sector return is market cap weighted average return for the coverage universe

within the sector

RELATIVE RISK RATING

Ratings Criteria

Low (L) Bottom 1/3rd percentile in the sector

Medium (M) Middle 1/3rd percentile in the sector

High (H) Top 1/3rd percentile in the sector

Risk ratings are based on Edelweiss risk model

SECTOR RATING

Ratings Criteria

Overweight (OW) Sector return > 1.25 x Nifty return

Equalweight (EW) Sector return > 0.75 x Nifty return

Sector return < 1.25 x Nifty return

Underweight (UW) Sector return < 0.75 x Nifty return



Edelweiss Securities Limited, Edelweiss House, off C.S.T. Road, Kalina, Mumbai – 400 098.

Board: (91-22) 4009 4400, Email: [email protected]

Aditya Narain

Head of Research

[email protected]

Coverage group(s) of stocks by primary analyst(s): Engineering and Capital Goods

ABB India, Bharat Heavy Electricals, Bharat Forge, CG Power and Industrial Solutions, Engineers India Ltd, Greaves Cotton, KEC International, Cummins India, Kalpataru Power, Larsen & Toubro, Praj Industries, Ramkrishna Forgings, Siemens, TD Power Systems, Techno Electric & Engineering, Thermax, Triveni Turbine, VA Tech Wabag

Distribution of Ratings / Market Cap

Edelweiss Research Coverage Universe

Rating Distribution* 161 67 11 240 * 1stocks under review

Market Cap (INR) 156 62 11

Date Company Title Price (INR) Recos

Recent Research

11-Sep-17 Cummins India

Higher growth trajectory imminent; Company Update

915 Buy

17-Aug-17 Praj Industries

Poor show; 2G ethanol to spur revival; Result Update

72 Buy

16-Aug-17 Tata Power Company

Renewable healthy; ample triggers in store; Result Update

82 Buy

> 50bn Between 10bn and 50 bn < 10bn

Buy Hold Reduce Total

Rating Interpretation

Buy appreciate more than 15% over a 12-month period

Hold appreciate up to 15% over a 12-month period

Reduce depreciate more than 5% over a 12-month period

Rating Expected to

-

149

297

446

594

743

Jan

-14

Feb

-14

Mar

-14

Ap

r-1

4

May

-14

Jun

-14

Jul-

14

Au

g-1

4

Sep

-14

Oct

-14

No

v-1

4

De

c-1

4

(IN

R)

One year price chart

150

200

250

300

350

400

Sep

-16

Oct

-16

No

v-1

6

De

c-1

6

Jan

-17

Feb

-17

Mar

-17

Ap

r-1

7

May

-17

Jun

-17

Jul-

17

Au

g-1

7

Sep

-17

(IN

R)

Kalpataru Power Transmission


Kalpataru Power

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Kalpataru Power

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