Buy Kalpataru Power Transmission target of Rs 250: Sharekhan

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Sharekhan's research report on Kalpataru Power Transmission

Lower execution due to the lockdown impacted revenue, while operating profit margin expanded marginally. However, higher interest cost and tax rate led to a 21.7% y-o-y decline in standalone net profit. Management has guided for5-10% standalone revenue growth for FY2021and OPM of 10.75-11%.The company has bagged orders worth Rs. 909 crore YTD and is L1 in Rs. 2,000 crore orders. KPTL has announced buy back of shares, which may have limited impact on sentiments but may restrict the decline in the stock price. Management continues its asset monetisation exercise to strengthen its balance sheet.

Outlook

We maintain our Buy rating on Kalpataru Power Transmission Limited (KPTL) with an unchanged PT of Rs. 250, considering attractive valuation and KPTL’s strong execution and order intake capabilities.

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