Recommendation from Capital Goods Sector

This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year

Triveni Turbine Ltd: POWERING INDUSTRY, DRIVING ENERGY EFFICIENCY

HERE IS WHY
✓  6,000+ turbines across 80 countries
✓  Expanding globally, especially in the USA
✓  Energy Dome deal for CO₂ storage

The power sector is vital to the global economy. As per the International Energy Agency report, the world’s electricity consumption is forecast to rise at its fastest pace in recent years, growing at close to 4 per cent annually through 2027. As per the National Electricity Plan 2022-32 report, it has projected all India peak electricity demand and electrical energy requirement to be 366.4 GW and 2,473.8 BU for the year 2031-32. The energy demand is driven by growing use for industry, air conditioning, electric vehicles, electrification, and data centres.

One such company that will directly benefit from the increasing demand for electricity is our Choice Scrip recommendation for this issue of the magazine, Triveni Turbine Ltd (TTL). The company is a focused, growing, and market-leading corporation having core competency in the area of industrial heat & power solutions and decentralised steam-based renewable turbines up to 100 MW size. The company is amongst the leading manufacturers of industrial steam turbines both in India and globally. TTL has installed 6,000+ steam turbines across over 20 industries and 80 countries.

In Q4FY25, on a consolidated basis, revenue of the company increased by 17.44 per cent YoY to ₹538 crore compared to ₹458.10 crore from the previous year’s same quarter. On a sequential basis, revenue increased by 6.87 per cent. PBIDT excluding other income increased by 34.08 per cent to ₹120.40 crore YoY as compared to ₹89.80 crore from the previous year’s same quarter, while sequentially it increased by 10.16 per cent. Net profit stood at ₹94.60 crore compared to ₹75.60 crore, a YoY increase of 25.13 per cent, while sequentially it increased by 2.27 per cent from ₹92.50 crore.

On the geographical front, 48 per cent of the revenue comes from India while 52 per cent comes from the rest of the world. For FY25, the company has the highest ever annual order booking of ₹2,363 crore with an increase of 26 per cent YoY and the order book stands at ₹1,909 crore with an increase of 23 per cent YoY. TTL is now in the approved vendor list of major global refineries and petrochemical complexes, expanding both drive and power turbine opportunities in the future. At TTL's current operating level, they are able to balance and manage 300-350 turbines annually

Market expansion is occurring in high-potential regions such as the United States. The US market is seen as promising for both aftermarket refurbishment and new product sales, driven by the American Petroleum Institute market, geothermal, and industrial power generation. Recently, the company has secured a ₹290 crore order with Energy Dome (Italy) and NTPC for a 160-MWh long-duration energy storage project at Kudgi Supercritical Thermal Power Plant. Its unique and new technology CO₂- based energy storage system.

On the valuation front, the shares of the company are trading at a PE of 52.5 times, which is higher than the industry PE of 41.6 times but lower than the three-year median PE of the company, which is 60.8 times. The company has a three-year ROE of 28.2 per cent and ROCE of 37.1 per cent. The company's three-year sales growth and profit growth stand at 33 per cent and 46 per cent respectively. The company's Piotroski score is 8, which is considered the best in the industry. Considering TTL's business and all these factors, we recommend BUY.