ICICI Direct has given Buy recommendation for Triveni Engineering recommended buy rating on the stock with a target price of Rs 270 in its research with a target price of Rs. 270 in its research report issued on Jun 30, 2021

ICICI Direct’s research report on Triveni Engineering

Triveni Engineering (TEL) reported Q4FY21 results with 20.5% revenue degrowth. The decline was mainly due to a dip in sugar volumes impacted by lower domestic quota & delay in exports. Sugar segment revenue declined 27.6% with similar decline in sugar sales volumes. The company sold 2.74 lakh tonnes (lt) of sugar at realisation of Rs 32.3/kg and is holding 4.7 lt of sugar at an average price of Rs 30/kg. However, distillery revenue increased 57.9% led by 16.5% higher distillery volumes & 7.9% increase in realisation (due to higher proportion of B-heavy ethanol). The distillery volumes were 2.16 crore litre at average realisation of Rs 57.3/litre. Gear business saw growth of 55.7% given base quarter was adversely impacted by Covid-19 lockdown. Water business continues to remain impacted by pandemic with delay in execution of projects. Operating profit saw de-growth of 11.9% mainly due to muted sugar segment sales. PAT dipped 38.2% to Rs 85 crore on the back of higher tax provisioning. Total debt is lower by Rs 576 crore to Rs 958 crore. TEL generated operating cash flow of Rs 739 crore in FY21.

Outlook

We maintain BUY recommendation with a revised target price of Rs 270/share, valuing at 13x FY23 PE (earlier TP Rs 125).