Over 40% upside potential! Why brokerages are bullish on this stock post Q1 results

Shares of the steam turbine firm Triveni Turbine have delivered over 20 per cent return in the last one month. Brokerages continue to maintain their bullish stance on the stock after the company posted its earnings for the quarter ended June 2022 and believe that the momentum is likely to continue going forward.

Yes securities, in its recent report, has a 'Buy' call on the stock with a target price of Rs 273, signaling a potential upside of 41 per cent in the counter, from its previous close of Rs 192.95 on Tuesday.

The brokerage firm believes that the company’s strong margin profile, lean working capital, healthy cash flows, balance sheet and long-term growth prospects will support its valuations and future projections. Given the strong enquiry pipeline, management’s focus on cost rationalization, and improving operational efficiency, it expects the company to generate revenue/PAT CAGR of 25%/29% from FY21 to FY24E.

"Order book remains strong at Rs 1070 crore, providing revenue visibility for FY23. Going forward, management expects margins to be in the region of 20% and guided for 30‐35 per cent FY23 revenue growth, it added.

According to Prabhudas Lilladher, the near-term outlook remains positive given strong exports, continued domestic demand from sectors such as distilleries, steel, cement, pharma, pulp, paper, food processing etc, enhanced addressable market in energy-efficient API turbines for Oil and Gas industry and 30-100 MW turbines and capacity expansion at Sompura plant to meet the increasing demand for next couple of years.

It believes a strong order book, robust enquiry pipeline, incremental opportunity with a foray into 30-100 MW market and API Turbines, and favorable product mix are likely to aid margins and drive growth in the medium term. Accordingly, the brokerage expects a revenue/PAT CAGR of 27/34 per cent for FY22-24E.

Triveni Turbine posted a 38 per cent jump in its consolidated net profit to Rs 38.33 crore for the April-June quarter on account of higher income. The consolidated net profit in the June 2021 quarter was Rs 27.75 crore.

Its total income rose to Rs 266.49 crore in the first quarter of the current fiscal from Rs 189.61 crore in the same period of the last year.

With a market capitalisation of more than Rs 6,000 crore, the shares are trading above the 5, 10, 20, 50, 100, 200-DMA.

In a separate statement, Dhruv M Sawhney, Chairman and Managing Director, Triveni Turbine said, "The company has started FY23 on a positive note. During the quarter, we have reported yet another record order booking in a single quarter of Rs 360 crore, which will boost our performance in the year."

Triveni Turbine Limited (TTL) has core competency in the area of industrial steam turbines, designing and manufacturing them up to 100 megawatt size.

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