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HDFC Securities Report
Key takeaways from Kalpataru Power Transmission Ltd.’s FY20 Annual report are as follows:
1) geographically a well diversified order book and robust bid pipeline;
2) standalone profitability stable and moderate; consolidated profitability dragged by subsidiaries performance, mainly pertaining to build-operate-transfer (BOT) assets;
3) while borrowings increased by 25%, it is still quite comfortable (net debt to equity ratio at 0.29); and
(4) investment/loans worth Rs 1,650/Rs 320 million given to Shree Shubham Logistics Ltd.
Multiple triggers are in place for further rerating with:
1) resumptions of near 75-80% execution in Jun-20, (2) likely receipts of monetisation proceeds of three build-own-operate-transfer (BOOT) transmission assets during FY21E worth Rs 10 billion plus, and (3) restructuring of JMC Project India Ltd. three Roads BOTs, which shall reduce cash burnout.
The overhang of the promoter group’s real estate exposure will continue to restrict multiple rerating.
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