Anand Rathi has given Buy recommendation for Kalpataru Power with a target price of Rs. 427 in its research report issued on May 16, 2022

Anand Rathi’s research report on Kalpataru Power

Prevailing challenges related to input costs and supply-chain disruptions hurt Kalpataru’s Q4 FY22 performance. Revenue fell 14% y/y and the EBITDA margin contracted 189bps y/y. On execution front, the company is well placed to deliver decent revenue growth (an 11% CAGR over FY22-24) led by its strong, Rs157.6bn, order book, 2.2x FY22 sales. Commodity pressures, however, will curb profitability, with FY23e/FY24e EBITDA margin expected to be benign at 8.7%/9.3%, compared to the past 10.5-11%. The recent fall in the stock price reflects the ongoing challenges and, hence, is attractive at 10.7x FY24e EPS.

Outlook

We maintain our Buy rating with a target price of Rs427 (assigning a 10x P/E to FY24e core earnings).

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