Anand Rathi
Kalpataru Power Transmission (Buy)
CMP: ₹400
Target: ₹576
b) Despite its operating leverage, the company expects to sustain margins at FY19 levels due to higher execution in the low-profitable business (railways and pipelines). On the monetisation of three assets, surplus cash would be used to repay debt and reduce interest costs in FY21. We expect earnings to clock a 20 per cent CAGR over FY19-22.
Valuation: We maintain ‘buy’ rating on the stock with SoTP based revised TP of ₹576 (assigning lower P/E multiple of 11x to the core earnings). Despite slowdown in T&D capex, execution has been healthy.
Risk: Slowdown in inflows.