Sharekhan's research report on Kalpataru Power Transmission
KPTL ventures into Nordic countries and European market with the acquisition of Linjemontage. KPTL acquires 85% stake at an EV of $24 million (8.6x its EV/EBITDA CY2018) to be funded majorly through internal accruals and some short-term debt. The deal is marginally value accretive considering 5% yield on current cash and 85% stake in Linjemontage's FY2019E net earnings. Linjemontage has a strong revenue growth profile (average 35% over trailing three years) and high return ratios (average 25% ROCE over trailing two years) with $77 million order book (1x its CY2018 revenue).
Outlook
The deal is reasonably valued and provides deeper access to KPTL in international markets (currently has 36% international orders). We await transaction to get closed by Q1FY2020. We maintain our Buy rating with unchanged PT of Rs. 552.
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Read More First Published on Mar 27, 2019 04:13 pm
