Triveni Engineering – Q2FY21 Company Update – ICICI Direct
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The most important factor in the September quarter results for most of the sugar companies was a significant increase in operating cash flow and a reduction in working capital debt. In a similar context, Triveni Engineering (TEL) also saw ~ Rs. 900 crore operating cash flow generation in S1FY21 and ~ Rs. Debt reduction by 1000 crore over the past year. TEL was able to increase distillery volumes by 34% in S1FY21, mainly through better utilization of the 160 KLD distillery put into operation in April 2019. In addition, the company aggressively exported 2.85 tons lakh (lt) during of the 2019-20 sugar season, which has led to a reduction of 1.7 lt of sugar over the past year. TEL has three months of sugar stock (2.7 lt) compared to an average of five months in the industry. It is also considering an expansion of the capital of the 160 KLD distillery to use the heavy sugarcane / B juice route to take advantage of the ethanol blending program and the subsequent increase in ethanol-based prices. of cane juice / heavy B.
Assessment and outlook
With the liquidation of excess sugar inventories and a significant increase in ethanol revenue, the company is expected to experience CAGR earnings growth of 9.1% in fiscal year 20-22E. In addition, a possible expansion of the distillery will likely eliminate dependence on sugar exports in the future. We expect operating cash flow generation of Rs. 592 crore and 706 crore in FY21E and FY22E, respectively. We estimate ~ Rs. 850 crore of debt reduction in fiscal years 20-22E. We value the stock at 1.2x the FY 22 book value with a revised target price of Rs. 90 / share (previously the target price was Rs. 95 / share) and maintain the PURCHASE rating.
For more details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Triveni_CoUpdate_Nov20.pdf
Shares of TRIVENI ENGINEERING & INDUSTRIES LTD. was last trading on BSE at Rs.66.3 from the previous close of Rs. 66.65. The total number of shares traded during the day was 30,019 in more than 683 trades.
The share hit an intraday high of Rs. 69.5 and an intraday low of 66.15. The net turnover during the day was Rs. 2005031.
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