Buy Kalpataru Power Transmission; target of Rs 300: Dolat Capital

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Dolat Capital's research report on Kalpataru Power Transmission

Despite a marginal topline miss, KPTL has managed its EBIDTA of 11% with a better project mix. PAT was lower than estimate on account of higher interest and taxes, as WC needs went up in Q4. While Q1 is likely to be subdued, it is confident of pickup from Q2 onwards and has guided a 10% revenue growth and margins in 10.5-11% range for FY21. We are building in a 5%/15% topline growth in FY21E/22E and trim our FY21E and FY22E estimates as outlined in Exhibit 2. Given its strong order book (~1.9x FY20 sales), we expect execution to pick up post lockdown, while order inflows should revive from T&D and rail capex.

Outlook

Current valuations at PE of 6x FY22 are undemanding and we continue to maintain our Buy rating with a TP of Rs 300.

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