Triveni Engineering Q3 Results Review - Systematix Retains 'Buy' On The Stock — Here's Why

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Systematix Research Report

Triveni Engineering and Industries Ltd.’s consolidated revenue grew 3% YoY to Rs 16 billion (in line with estimate) on the back of 9%/3% YoY growth in distillery/gear revenues at Rs 3.3 billion/Rs 0.7 billion, respectively. However, 9%/8% YoY degrowth in sugar/water revenues at Rs 9.3 billion/Rs 0.5 billion respectively, partly offset the positive performance.

Gross margin contracted 227 bps YoY to 42.9% (estimate of 43%), Ebitda fell 60% YoY to Rs 771 million (48% below estimate) and Ebitda margin contracted 760 bps YoY to 4.8% (estimate of 9.5%). Weak performance in all business verticals impacted Triveni Engineering’s profitability, as Ebit for sugar/distillery/gears fell by 65%/92%/11% YoY.

However, we expect profitability to improve in the coming quarters on the back of

1. Rs 2-2.5/kg increase in sugar price, on forecast lower sugar production in sugar season 2025 and allocation of sugar export,

2. higher price of C-Heavy molasses-based ethanol, availability of FCI rice at lower price and expected softening of maize prices in anticipation of a bumper crop, and

3. positive developments in gears, water, and waste-water treatment businesses in 9M FY25, supported by robust domestic and international order books.

We have raised FY25 revenue by 16% to factor in higher export sugar volumes but cut FY25E/FY26E Ebitda by 7.7%/22.6% to factor in higher raw material sugar and ethanol costs; EPS too is cut by 7.9%/25.5%.

We roll forward valuations to newly introduced FY27E. Our SoTP-based target price of Rs 472 (Rs 482 earlier) implies 17 times FY27E P/E and 12x FY27E EV/Ebitda. We retain Buy on Triveni Engineering and assign EV/Ebit of 14x to distillery, 7x to sugar and 20x to engineering and water businesses.

Key risks: Disappointing recovery rate and higher maize/rice procurement prices.

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