Reviews

In this edition, we have reviewed SJVN Limited and Kalpataru Projects Limited. We suggest our reader-investors to HOLD SJVN Limited and Kalpataru Projects Limited 

We had recommended SJVN Ltd. in Volume 39, Issue No. 9 dated March 25, 2024 — April 7, 2024, 2024, under the ‘Low Price’ segment. The recommended price for the stock was ₹117.75. The stock had been chosen among others since the company focuses on renewable energy, green ammonia expansion and solid fundamentals. SJVN operates India’s single-largest hydro power plant (NJHPS: 1,500 MW). Also, RHPS (412 MW) is the country’s second-largest hydro power generator. 

The company has a steady income through long-term power agreements with state electricity boards and distributors, ensuring reliable revenue. In Q2FY25, on a consolidated basis, the company’s revenue increased by 16.8 per cent YoY to ₹1,026 crore compared to ₹878 crore from the previous year’s same quarter. On a sequential basis, its revenue increased by 17.9 per cent. The PBIDT excluding other income increased by 17.2 per cent to ₹828 crore YoY as compared to ₹706 crore from the previous year’s same quarter, while sequentially it increased by 28.1 per cent. Its net profit stood at ₹440 crore which is stable compared to the same quarter from last year, while sequentially increasing by 23.2 per cent from ₹357 crore. 

At TTM, the shares of SJVN are trading at a PE of 76.4 times, which is higher than its three-year median PE of 47.4 times, whereas the industry PE stands at 48.9 times. If we look at its PBV, it is currently at 3.1 times, which is higher than the industry PBV of 2.32 times. The company has a three-year average return on equity (ROE) of 8 per cent and a return on capital employed (ROCE) of 7.82 per cent. The revenue guidance for FY25 is approximately ₹3,200 crore. Its upcoming projects are expected to increase the total capacity to approximately 5,000 MW by the end of FY25. 

SJVN Green Energy Limited achieved its renewable energy tender target for FY24 and FY25 with 4.8 GW floated towards a 10.8 GW goal. The company plans to raise ₹2,000 crore by selling a 20 per cent stake, pending approval from NITI Aayog and DIPAM. Its current debt is around ₹21,000 crore, expected to rise to ₹28,000 crore by FY25 for project funding. Additionally, SJVN has also signed a MoU with AM Green Ammonia to expand green ammonia production from 1 to 5 million tonnes annually by 2030. It will install rooftop solar systems on government buildings to support free electricity for 1 crore homes. Hence, we recommend HOLD. 

We had recommended Kalpataru Projects in Volume 39, Issue No. 10 dated April 8, 2024 — April 21, 2024, under the ‘Choice Scrip’ segment. The recommended price for the stock was ₹1,108.75. We had recommended the stock on the basis of a strong order book, high return on capital employed (ROCE), and improved position. Kalpataru Power Transmission is a leading global player in power transmission, distribution, oil and gas pipelines, railways, and biomass-based power generation. The company ranks among the top three in India’s transmission and distribution (TDI) sector. 

Kalpataru Projects also operates two biomass power plants in Rajasthan, generating around 16 MW of electricity using agricultural waste and crop residues as fuel, promoting sustainable energy solutions. 

In Q2FY25, on a consolidated basis, the company’s revenue decreased by 9.1 per cent YoY to ₹4,930 crore compared to ₹4,518 crore from the previous year’s same quarter. On a sequential basis, the revenue increased by 7.4 per cent. The PBIDT excluding other income increased by 18.05 per cent to ₹438 crore YoY as compared to ₹371 crore from the previous year’s same quarter, while sequentially increasing by 15.56 per cent. The net profit stood at ₹126 crore compared to ₹90 crore, a YoY increase of 40 per cent, while sequentially decreasing by 50 per cent from ₹84 crore. 

At TTM, the shares of the company are trading at a PE of 40.8 times, which is lower than its industry PE of 50.9 times.If we look at its PBV, it is currently at 4.04 times, which is lower than the industry PBV of 4.57 times. The company has a three-year average return on equity (ROE) of 9.56 per cent and a return on capital employed (ROCE) of 14.4 per cent. In FY25, Kalpataru Power Transmission Ltd. secured orders worth ₹11,865 crore and has additional L1 orders of over ₹7,000 crore, mostly in the transmission and distribution business in India. 

The company’s Swedish subsidiary, LMG, has a record-high order book of ₹2,958 crore, with new orders of ₹1,892 crore, marking a 103 per cent growth compared to last year. Kalpataru Projects is strengthening its core business with an improved position in HVDC transmission and distribution, metro rail, and airport EPC projects. The company has also signed a deal to divest Vindyachal Expressway (P) Ltd. for ₹775 crore, expected to close in FY26. Hence, we recommend HOLD.