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Kalpataru Power to consider fundraising proposal via NCDs issuance this week

At present, the company is executing projects in over 30 countries and has a global footprint in 67 countries.Premium
At present, the company is executing projects in over 30 countries and has a global footprint in 67 countries.

  • The company's executive committee is scheduled to meet on December 8 to consider the proposal. The leading EPC company is looking to raise funds through the issuance of Non-Convertible Debentures on a private placement basis.

Kalpataru Power Transmission to consider the fundraising proposal later in the current week. The company's executive committee is scheduled to meet on December 8 to consider the proposal. The leading EPC company is looking to raise funds through the issuance of Non-Convertible Debentures on a private placement basis. Kalpataru shares will be in focus this week.

In its regulatory filing, it said, "this is to inform you that a meeting of the Executive Committee of the Board of Directors of the Company is scheduled to be held on Thursday, 8th December 2022, inter-alia to consider and approve the proposal for the raising of funds by way of issuance of Non-Convertible Debentures on private placement basis."

On Monday, Kalpataru Power shares dipped by 0.71% to end at 516.85 apiece on BSE. The stock had touched an intraday high and low of 524.70 apiece and 513.60 apiece respectively.

The company's market cap is over 7,696 crore.

In the first half of FY23, Kalpataru Power posted a net profit of 175 crore up by 55% yoy, however, revenue declined by 4% yoy to 3,071 crore. EBITDA came in at 255 crore, while the EBITDA margin stood at 8.3%. As of September 30, 2022, the company's order book stood at 18,856 crore (including LMG and Fasttel). In the first half, the company received new orders worth 6,889 crore.

Meanwhile, in Q2FY23, on a consolidated basis, the company's revenue stood at 3,798 crore up by 7% yoy, while profitability rose by 18% yoy to 98 crore. EBITDA surged by 16% yoy to 350 crore and EBIDTA margin was at 9.2%. As of September 30, 2022, the company's net debt stood at 2,905 crore.

Last month, in its post-Q2 report, Emkay Global in its report said, revenue growth has been lagging in H1 as FY22 ordering was moderate. This is expected to pick up from 4QFY23. Further, the margin at 8.2-8.4% is expected to improve, given the easing commodity prices. KTPL’s average EBITDA margin for the past five years has been ~10.5%.

Further, the report added on JMC Projects that H1FY2023 revenue growth stood at 40%. Hence, management’s guidance of 20-25% for the year looks conservative. Margin has recouped to 8.4% during H1FY2023 versus ~7% YoY. Easing commodity prices should aid margins in the coming quarters. Funding for road projects would be Rs700 million - 800 million in FY23. With restructuring and revenue growth, it could mostly reach Rs250 million in FY24. Order book of Rs200bn implies book-to-bill of 3.2x.

On valuation, Emkay's note said, "We have rolled our valuation to Dec-23, with a TP of Rs565. We have valued the core KPTL standalone business at Rs428/share (13.5x on Dec-24 earnings) and JMC’s share at Rs88/share (30% discount to the proportionate value). Cash and other investments are valued at Rs49share. We maintain Buy on the stock. Low ordering remains a risk."

Kalpataru Power is a leading EPC company with capabilities in power transmission & distribution, oil & gas pipeline, railways, and civil infrastructure business. At present, the company is executing projects in over 30 countries and has a global footprint in 67 countries.

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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