Buy Kalpataru Power, target price Rs 560: Emkay Global

Emkay Global has buy call on Kalpataru Power Transmissions with a target price of Rs 560. The current market price of Kalpataru Power Transmissions is Rs 467.35. Time period given by analyst is one year when Kalpataru Power Transmissions price can reach defined target.

Kalpataru Power Transmissions Ltd., incorporated in the year 1981, is a Mid Cap company (having a market cap of Rs 6945.87 Crore) operating in Power sector.

Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 3218.00 Crore, down -21.59 % from last quarter Total Income of Rs 4104.00 Crore and up 37.82 % from last year same quarter Total Income of Rs 2335.00 Crore. Company reported net profit after tax of Rs 87.00 Crore in latest quarter.


Investment Rationale
The SoTP-based TP of Rs560 comprises Rs500/share for KPP (SA) based on 13.5x Sept’23E core EPS and Rs60/share for the stake in JMC projects (valued at a 30% discount to the current value). With the sale of some transmission assets, balance sheet has improved, and capital allocation issues are already receding. Key risks to the call: sustained commodity inflation and execution challenges.

Promoter/FII Holdings
Promoters held 54.6 per cent stake in the company as of June 30, 2021, while FIIs held 7.3 per cent, DIIs 28.4 per cent and public and others 9.8 per cent.