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TD Power Systems (TDPS) - Qtr. Update - Dated - November 18, 2013




Axis Capital Limited


18 Nov 2013





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TDPS’ Q2FY14 revenue and PAT declined by 37% and 62% YoY to Rs 1 bn and Rs 29 mn respectively. PAT was supported by other income of ~Rs 100 mn (earnings on investments). Decline in revenue was due to poor performance of EPC segment. Order book in manufacturing segment stood at Rs 2.8 bn (40% exports). Management remains confident of business recovery in H2FY14 driven by manufacturing segment, while outlook for EPC business continues to weaken. For FY14, management guided for revenue of Rs 3.7-3.9 bn in manufacturing and Rs 1.3 bn in EPC. While manufacturing is expected to sustain margin of ~16%, EPC is expected to barely breakeven. We cut our FY14/FY15 estimates to factor in more than expected weakness in EPC segment. Maintain SELL. Estimates and Valuation We reduce our EPS estimate to Rs 9.9 in FY14E (vs. Rs 11.4 earlier) and Rs 13.9 in FY15E (Rs 15.5 earlier). We revise downwards our TP to Rs 167 (12x FY15E EPS of Rs 13.9) from Rs 187 earlier. Our TP implies 13% downside from CMP of Rs 193. The stock trades at 19x FY14E EPS and 14x FY15E EPS estimates. Regards, Kashyap Pujara (ED – Midcaps) Institutional Equity Research Axis Capital Limited Tel: +91 22 4325 1146 Sonali Salgaonkar (AVP – Midcaps) Institutional Equity Research Axis Capital Limited Tel: +91 22 4325 1130

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