Kalpataru Power - A defensive Long term bet.

Kalpataru Power Transmission Ltd (KPTL) is part of the Kalpataru group and is a leading turnkey player in power, infrastructure and asset creation (transmission systems / roads / logistics & warehouse). It exports to 38 countries. It has 67.2% stake in JMC Projects (JMC) which is in the business of civil construction of residential/commercial buildings and road projects. It also has 70% stake in Shree Shubham Logistics (SSL) which is in agro-logistics business.



KPTL has a strong presence in domestic as well as international power transmission and distribution (T&D) markets. T&D contributes 90% to the standalone revenues of KPTL. The share of international business is at 65% of the standalone order book which, at the end of Q2FY14-15, stood at Rs5,500 crore. The current government is focused on boosting investment in the power sector. A pick-up in domestic T&D market is expected which will boost KPTL’s revenues and profits.



JMC has four road projects under BOOT (build, own, operate and transfer) model which are at various stages of completion. JMC’s revenues grew by 50.5% and 22.1% in FY11-12 and FY12-13. The order book of JMC stood at Rs490 crore in Q2FY14-15.

SSL is into agro-logistics services and is one of the largest private warehousing and agro-logistics players in India. Its revenues have increased by a compound annual growth rate (CAGR) of 39% in FY11-14 with an operating margin of 12%-15%. The current capacity of SSL is 1.7 million tonnes (mt); it is planning to add 0.15-0.2mt in the next financial year which will further boost its top-line growth.



For the quarter ended September 2014, its revenues were Rs1,140.77 crore (Rs962.20 crore) and the net profit was Rs42.70 crore (Rs30.99 crore). For the year ended March 2014, revenues were Rs4,055.25 crore (Rs3,335.40 crore) and net profit was Rs146.38 crore (Rs137.65 crore).
The shareholding pattern of KPTL includes 59.45% with promoters, 9.70% with foreign institutional investors, 21.61% with domestic institutional investors and 9.24% with retail investors and the general public.



Over the past five quarters, KPTL’s average sales growth was 21% and its average operating profit growth was 18%. Its average operating margin is 9%. The market-capitalisation is 0.81 times sales and 8.65 times operating profit. The return on net worth is 7%. The debt-equity ratio is 0.40 and the return on capital employed is 12%. The cash earnings per share of KPTL were Rs14.07.
The dividend distributed by KPTL for FY13-14 was 75%. It has maintained the same rate of dividend distribution for every financial year since FY06-07. The face value of KPTL’s share is Rs2 and the book value is Rs127.14. KPTL’s share rose from a 52-week low of Rs70.50 on 13 February 2014 to a 52-week high of Rs248.90 on 9 January 2015.