BUY CMP 244.05 Target Price 280.00 KALPATARU POWER TRANSMISSION LTD. Result Update (PARENT BASIS): Q3 FY15 March 2 nd 2015 ISIN: INE220B01022 Index Details Stock Data Sector Heavy Electrical Equipment BSE Code 522287 Face Value 2.00 52wk. High / Low (Rs.) 254.60/80.60 Volume (2wk. Avg.) 49000 Market Cap (Rs. in mn.) 37451.91 Annual Estimated Results (A*: Actual / E*: Estimated) YEARS FY14A FY15E FY16E Net Sales 40552.50 46016.52 51078.33 EBITDA 4346.30 4952.02 5468.88 Net Profit 1463.80 1715.46 1951.58 EPS 9.54 11.18 12.72 P/E 25.59 21.83 19.19 Shareholding Pattern (%) 1 Year Comparative Graph KALPATARU POWER TRANSMISSION S&P BSE SENSEX SYNOPSIS Kalpataru Power Transmission Ltd (KPTL) is one of the largest and fastest growing specialized EPC companies in India. During Q3 FY15, net profit jumps to Rs. 409.90 mn against Rs. 337.00 mn in the corresponding quarter ending of previous year, an increase of 21.63%. Revenue for the quarter rose by 9.11% to Rs. 11471.30 mn from Rs. 10513.40 mn, when compared with the prior year period. EBIDTA excluding other income for the quarter is Rs 1117.6 mn as compared to Rs 940.4 mn in the corresponding quarter of previous year, a growth of 19%. PBT for the quarter is Rs 630.4 mn as compared to Rs 512.8 mn in Q3 FY14, a growth of 23%. EPS of the company stood at Rs. 2.67 a share during the quarter, registering 21.63% increased over previous year period. As on Dec 31, 2014, consolidated order book of above Rs 1,07,000 mn and KPTL has order book of around Rs 50,000 mn including new orders worth over Rs. 5600 mn received during the quarter. JMC Projects a subsidiary of KPTL has order book of over Rs. 57,000 mn including new orders worth over Rs. 18000 mn received during the quarter. Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 12% over 2013 to 2016E respectively. PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%) Kalpataru Power Transmission Ltd 244.05 37451.91 9.54 25.59 1.92 75.00 KEC International Ltd 86.10 22135.30 5.15 16.72 1.86 30.00 Voltamp Transformers Ltd 687.00 6950.50 25.46 26.98 1.64 100.00 Crompton Greaves Ltd 179.80 112689.00 7.53 23.88 3.09 60.00
QUARTERLY HIGHLIGHTS (PARENT BASIS) Results updates- Q3 FY15, Kalpataru Power Transmission is one of the largest and fastest growing specialized EPC companies in India, reported its financial results for the quarter ended 31 st Dec, 2014. Months Dec-14 Dec-13 % Change Net Sales 11471.30 10513.40 9.11 PAT 409.90 337.00 21.63 EPS 2.67 2.20 21.63 PBIDT 1230.80 1043.80 17.92 The company s net profit jumps to Rs. 409.90 million against Rs. 337.00 million in the corresponding quarter ending of previous year, an increase of 21.63%. Revenue for the quarter rose by 9.11% to Rs. 11471.30 million from Rs. 10513.40 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 2.67 a share during the quarter, registering 21.63% increased over previous year period. Profit before interest, depreciation and tax is Rs. 1230.80 million as against Rs. 1043.80 million in the corresponding period of the previous year. Break up of Expenditure Break up of Expenditure Cost of material consumed Erection & Sub- Contracting expenses Employee Benefit Expenses Depreciation & Amortization Expenses Value in Rs. Million Q3 FY15 Q3 FY14 % Change 4896.60 5257.90-7% 3054.80 2534.00 21% 789.40 661.90 19% 214.80 180.90 19% Other Expenses 1526.90 1374.10 11%
Segment Revenue Order Book As on December 31, 2014, company has consolidated order book of above Rs 1,07,000 mn KPTL has order book of around Rs 50,000 mn including new orders worth over Rs 5600 mn received during the quarter. As on date, KPTL also has lowest bid position in projects, in excess of Rs 21000 mn. JMC Projects has order book of over Rs 57,000 mn including new orders worth over Rs 18000 mn received during the quarter Kalpataru Power Transmission Limited (KPTL) has secured following new orders worth around Rs 5600 mn, of which major orders are as follows: 2 transmission lines in Kargil of 80 kms worth Rs 2370 crore from PGCIL Supply, Erection and Commissioning of 3 transmission line of 400 KV near Agra of 263 kms worth over Rs 1900 mn from PGCIL Pipeline laying project worth Rs 1320 mn from Indian Oil Corporation Ltd
COMPANY PROFILE Kalpataru Power Transmission Ltd (KPTL) is the Kalpataru group s listed entity and continues to look for development projects in various infrastructure sectors. KPTL is one of the largest and fastest growing specialized EPC companies in India engaged in power transmission & distribution, oil & gas pipeline, railways, infrastructure development, civil contracting and warehousing & logistics business with a strong international presence in 38 countries in power transmission & distribution. The company is currently executing several projects in India, Africa, Middle East, Australia, North America and Far East. As an industry leader in the power transmission business, KPTL provides end-to-end solution ranging from inhouse designs, testing, procurement and fabrication to erection, installing and commissioning of transmission lines. With state-of-the-art testing facility and a production capacity of more than 1,80,000 MT of transmission towers, KPTL is among the trusted names in the industry. The Company has installed over 14,000 kms of transmission lines and supplied over 1 million tons of towers across the globe supported by its strong and dedicated human resource pool of more 1900 professionals. Subsidiary Companies JMC Projects (India) Ltd Shree Shubham Logistics Ltd Energylink (India) Ltd. (100% Subsidiary) Amber Real Estate Ltd Kalpataru Power Transmission USA INC Kalpataru Power Transmission (Mauritius) Ltd Kalpataru SA (Proprietary) Ltd Kalpataru Power Transmission Nigeria Ltd Adeshwar Infrabuild Ltd Kalpataru Power Transmission International B. V. (Netherlands)
FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions) Balance Sheet as at March 31 st, 2013-2016E KPTL. FY13A FY14A FY15E FY16E SOURCES OF FUNDS Shareholder's Funds Share Capital 306.92 306.92 306.92 306.92 Reserves and Surplus 18156.47 19234.83 20947.46 22899.04 1. Sub Total - Net worth 18463.39 19541.75 21254.38 23205.96 Non Current Liabilities Long term borrowings 1526.14 677.06 2125.54 2359.35 Deferred Tax Liabilities 118.11 137.73 143.24 151.83 Other Long Term Liabilities 6.88 11.66 12.71 13.47 Long Term Provisions 669.15 890.69 1131.18 1300.85 2. Sub Total - Non Current Liabilities 2320.28 1717.14 3412.66 3825.51 Current Liabilities Short Term Borrowings 3796.90 6310.28 5994.77 5575.13 Trade Payables 11807.36 12714.65 14799.85 16575.83 Other Current Liabilities 4444.94 5065.96 4052.77 4417.52 Short Term Provisions 753.28 821.27 673.44 727.32 3. Sub Total - Current Liabilities 20802.48 24912.16 25520.83 27295.80 Total Liabilities (1+2+3) 41586.15 46171.05 50187.87 54327.26 APPLICATION OF FUNDS Non-Current Assets Fixed Assets Tangible Assets 5260.63 5706.88 5878.09 6230.77 Intangible Assets 46.53 30.98 33.77 36.13 Capital Work-in-Progress 79.29 180.44 202.09 222.30 a) Sub Total - Fixed Assets 5386.45 5918.30 6113.95 6489.21 b) Non-Current Investment 3339.21 3834.02 4064.06 4324.16 c) Long Term loans and advances 5419.34 5123.21 5481.83 5755.93 d) Other Non-Current Assets 552.71 926.34 1018.97 1110.68 1. Sub Total - Non Current Assets 14697.71 15801.87 16678.82 17679.97 Current Assets Current Investment 11.50 1.50 1.80 2.02 Inventories 4439.67 5437.69 6525.23 7438.76 Trade receivables 12878.98 15416.53 17643.33 19362.12 Cash and Bank Balances 569.02 647.00 659.94 692.94 Short-terms loans & advances 4298.64 3914.63 3875.48 4108.01 Other current assets 4690.63 4951.83 4803.28 5043.44 2. Sub Total - Current Assets 26888.44 30369.18 33509.06 36647.29 Total Assets (1+2) 41586.15 46171.05 50187.87 54327.26
Annual Profit & Loss Statement for the period of 2013 to 2016E Value(Rs.in.mn) FY13A FY14A FY15E FY16E Description 12m 12m 12m 12m Net Sales 33354.00 40552.50 46016.52 51078.33 Other Income 477.20 483.80 533.36 565.36 Total Income 33831.20 41036.30 46549.88 51643.70 Expenditure -30133.20-36690.00-41597.86-46174.81 Operating Profit 3698.00 4346.30 4952.02 5468.88 Interest -1220.10-1459.90-1482.42-1556.55 Gross profit 2477.90 2886.40 3469.59 3912.34 Depreciation -522.50-695.50-865.29-986.43 Profit Before Tax 1955.40 2190.90 2604.30 2925.90 Tax -578.90-727.10-888.84-974.33 Net Profit 1376.50 1463.80 1715.46 1951.58 Equity capital 306.92 306.92 306.92 306.92 Reserves 18153.40 19232.00 20947.46 22899.04 Face value 2.00 2.00 2.00 2.00 EPS 8.97 9.54 11.18 12.72 Quarterly Profit & Loss Statement for the period of 30 th June, 2014 to 31 st Mar, 2015E Value(Rs.in.mn) 30-Jun-14 30-Sep-14 31-Dec-14 31-Mar-15E Description 3m 3m 3m 3m Net sales 10633.80 11407.70 11471.30 12503.72 Other income 105.60 195.70 113.20 118.86 Total Income 10739.40 11603.40 11584.50 12622.58 Expenditure -9571.10-10369.70-10353.70-11303.36 Operating profit 1168.30 1233.70 1230.80 1319.22 Interest -327.80-368.00-385.60-401.02 Gross profit 840.50 865.70 845.20 918.19 Depreciation -204.40-222.70-214.80-223.39 Profit Before Tax 636.10 643.00 630.40 694.80 Tax -217.50-216.00-220.50-234.84 Net Profit 418.60 427.00 409.90 459.96 Equity capital 306.92 306.92 306.92 306.92 Face value 2.00 2.00 2.00 2.00 EPS 2.73 2.78 2.67 3.00
Ratio Analysis Particulars FY13A FY14A FY15E FY16E EPS (Rs.) 8.97 9.54 11.18 12.72 EBITDA Margin (%) 11.09% 10.72% 10.76% 10.71% PBT Margin (%) 5.86% 5.40% 5.66% 5.73% PAT Margin (%) 4.13% 3.61% 3.73% 3.82% P/E Ratio (x) 27.21 25.59 21.83 19.19 ROE (%) 7.46% 7.49% 8.07% 8.41% ROCE (%) 17.75% 19.01% 19.80% 20.73% Debt Equity Ratio 0.29 0.36 0.38 0.34 EV/EBITDA (x) 11.41 10.08 9.07 8.17 Book Value (Rs.) 120.29 127.32 138.50 151.22 P/BV 2.03 1.92 1.76 1.61 Charts
OUTLOOK AND CONCLUSION At the current market price of Rs.244.05, the stock P/E ratio is at 21.83 x FY15E and 19.19 x FY16E respectively. Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.11.18 and Rs.12.72 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 15% and 12% over 2013 to 2016E respectively. On the basis of EV/EBITDA, the stock trades at 9.07 x for FY15E and 8.17 x for FY16E. Price to Book Value of the stock is expected to be at 1.76 x and 1.61 x respectively for FY15E and FY16E. We recommend BUY in this particular scrip with a target price of Rs.280.00 for Medium to Long term investment. INDUSTRY OVERVIEW Transmission & Distribution Despite a dip in the global funding of transmission line projects, the outlook remains strong for the sector with rising energy demands both in the developed and developing markets on account of thrust on renewable energy sources, cross border electricity networks especially in Europe and Africa, favorable demographics of Asia and Africa and underdeveloped transmission system in these countries. The Global T&D market has grown at a compounded rate of ~ 13.7% over the last eight years, on the back of strong growth in Asia, America, Middle East and Africa. An estimated investment of $ 1 trillion is expected in transmission industry, globally, over the next 6-7 years. The growth will be largely led by Asia, America, Middle East and Africa. While Africa is expected to have the fastest growth in its generation capacity at a CAGR of 10 percent, Asia Pacific and Middle East are expected to see fastest growth in their power consumption at a CAGR of close to 6.0 percent each. India The Indian power sector has seen significant changes over the past decade with newer legislation, and privatization across generation, transmission and distribution of power.
Despite doubling of the installed capacity between FY13 and FY12, for most Indian states power deficit and blackouts are still common. One of the key reasons for this has been the skewed investment allocation in favor of generation instead of equal split with T&D. There is significant distance between power generation/surplus centers like eastern & north-eastern regions and power consumption/deficit centers like southern region. A strong transmission highway is critical for optimal utilization of resources through effective evacuation from surplus regions and dispensation in the deficit regions. In the 12 th five year plan, the government has made an effort to correct this anomaly by increasing the share of T&D sector in the planned capital expenditure for the sector. Significant capex allocation has been earmarked to create evacuation infrastructure for upcoming Independent Power Producer (IPP) generation facilities, to connect renewable energy facilities and to strengthen and modernize transmission infrastructure. The announcement of formation of Infrastructure Investment Trust for financing the infrastructure projects by Finance Minister in the budget will provide the opportunities to business to grow. The promotion of Public- Private Partnership (PPP) model is an effective tool to bring private-sector investments in the Infrastructure Sector. The proposal for feeder segregation and distributed solar generation will improve availability and quality which will provide opportunities for transmission line projects connecting green energy corridors to load centres. The northern grid failure followed by a cascade impact and subsequent collapse of the Eastern and North Eastern power grids last year was one of the biggest ever power failure in Indian history. In a vehement manner, it has established the need to earmark a greater investment towards T&D capex and to create more robust transmission infrastructure backbone. India s current transmission network is estimated at ~ 430,000 circuit km of transmission lines and has grown at a modest CAGR of 4% during the last four years. Close to 72% of this is under State Transmission Utility s (STU) and about 23% is owned by Power grid and 5% by private players. During 2009 13, Power grid owned network has expanded at a CAGR of 8.5 % while STUs owned network has expanded by a mild CAGR of 3.6%.
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