Stock To Buy: This Power Stock Could Soar 36% Feels Prabhudas Lilladher

Broking firm, Prabhudas Lilladher has recommended buying the stock of Kalapataru Transmission in it latest report. The broking firm sees significant upside from current levels.

Buy Kalpatarau Power stock, says Prabhudas Lilladher

Prabhudas Lilladher estimates FY23/24/25E EPS at Rs 35.3/45.7/57.3 and upgrade to 'Buy' from Accumulate with target price of Rs 670 (Rs 549 earlier), after factoring in robust order inflows along with merger synergies materializing from Q1FY24. "The merged entity of Kalpataru Power Transmission (KPP) saw revenue growth of 9.8% YoY to Rs 35.1 billion, led by decent execution in domestic and international geographies. EBITDA margin contracted by 32bps YoY to 8.7%. Order pipeline remains healthy with strong traction in domestic Water and B&F, International T&D and Oil & Gas. Interest cost synergies of Rs 500-700 mn will accrue from the merger in FY24. Further, management has guided for revenue growth of 15% in FY23 and 20%+ in FY24 & FY25 each," the brokerage has said.

Reasons to be positive on Kalpataru Power

Prabhudas Lilladher says that it remains positive on Kalpataru Power in the long run owing to 1) robust order backlog, 2) strong export market outlook, 3) growing opportunities in water and commercial real estate, along with government's thrust on capex in civil infrastructure, railways, and energy transition, 4) post-merger cost & operational synergies, and 5) deleveraging via non-core asset monetization. "The stock is currently trading at a PE of 14.0x/10.8x/8.6x FY23/24/25E EPS. Upgrade to 'BUY'," the brokerage said.

Robust order inflows of Rs6.3bn across segments

Order inflows came in at Rs6.3bn in Q3FY23 driven by T&D, Railways, and Oil & Gas. Order book currently stands at Rs41.4bn (3.1x TTM revenue) with L1 orders worth Rs5.2bn. Of the total order book, T&D accounts for 35%, Oil & Gas 4%, Railways 9%, Water 24%, B&F 19%, and Urban Infra 9%.

Disclaimer

The stock has been picked from the brokerage report of Prabhudas Lilladher. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.