Dalal Street Investment Journal - - RECOMMENDATIONS | EQUITY -

Kalpataru is a trans­mis­sion en­gi­neer­ing, pro­cure­ment and con­struc­tion (EPC) com­pany. The com­pany holds 67% stake in JMC Projects through which it car­ries con­struc­tion ac­tiv­i­ties. Dur­ing Q1FY18, the com­pany’s rev­enue de-growth in trans­mis­sion busi­ness was duly off­set by 17% and 27% YOY growth in rail­way and pip­ing busi­nesses, re­spec­tively. An­nu­ally, the com­pany has re­ported 13.8% and 39.8% rev­enue and PAT growth, re­spec­tively. The com­pany holds ro­bust or­der book at 975 crore as of June 2017, of which 43% com­prise in­ter­na­tional or­ders, pro­vid­ing rev­enue vis­i­bil­ity for over two years, while JMC too holds or­der book of 7000 crore till Q1FY18. Go­ing for­ward, the com­pany is also likely to ben­e­fit from high trans­mis­sion capex by do­mes­tic and global mar­kets. Power Grid SEB’S would in­vest 45,000 crore for im­prove­ment of in­tra-state trans­mis­sion net­work. Thereby, con­sid­er­ing strong or­der book of self and sub­sidiaries and the gov­ern­ment spend­ing, we rec­om­mend Buy in the scrip for a tar­get of 418 and with a stop loss of 340.

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