KPTL’s Swelling Order Book Assures A Good Growth Curve

Power transmission companies have now received a fresh breather after order flows from new clientele. For instance, despite aggressive competition, Kalpataru Power Transmission Ltd (KPTL) has managed to retain its status in the top five companies in terms of market share. The recent order win has made the company’s stock gain over 3 per cent on the bourses. Today, KPTL received two new orders – a 500 kilo volt (KV) DC line of around 167 kms from the Electricity Generating Authority of Thailand (EGAT) of around Rs 280 crore and a 765 KV Gwalior - Jaipur transmission line of 162 kms from Power Grid Corporation of India Ltd (PGCIL) of around Rs 380 crore.

As on March 31, 2012, KPTL had a consolidated order book of above Rs 11,600 crore. The company’s robust order book, supplemented by its infrastructure subsidiary JMC Projects’ impressive portfolio, provides revenue visibility for the next couple of years. KPTL’s standalone order book stood at over Rs 6,100 crore, including new orders received during Q4FY12 worth over Rs 2,000 crore, up by 193 per cent year-on-year. The major contributors for this robust order flow consist of the Democratic Republic of Congo, PGCIL, Tamil Nadu Transmission Corp and Gujarat State Petronet. JMC’s projects order book stood at Rs 5,500 crore, including order flow of Rs 850 crore in Q4FY12. KPTL’s order book is almost evenly distributed over international and domestic geographies, providing strong diversification in the current volatile market environment.

On the financial front, KPTL’s consolidated revenue for FY12 stood at Rs 5,308 crore as compared to Rs 4,363 crore in FY11, showing an increase of 22 per cent. The company’s earnings before interest, depreciation, tax and amortization (EBIDTA) for FY12 stood at Rs 500 crore as compared to Rs 464 crore in the previous year, an increase of 8 per cent. Its EBITDA margins took a beating owing to higher raw material costs. The company’s profit after tax for the year stood at Rs 204 crore as compared to Rs 211 crore in the previous year.

Since 70 per cent of KPTL’s domestic orders are based on a variable price clause, the company is significantly secured from a further rise in the raw material prices. Further, KPTL’s management has guided for 15 per cent and 20 per cent of topline growth at the standalone and consolidated levels for FY13E. Given the strong order book and good visibility for revenue, KPTL is well-placed in the power transmission industry and poised to show considerable growth over the next couple of years.