EIC & DCF summary sheet of Triveni Turbines as part of BAV course of MBA in KSOM

1. Submitted By –
Kirti Shubham
1318015
Sec - A
TRIVENI TURBINES
(GENERAL ELECTRONICS)

2. KIRTI SHUBHAM, 1318015 TRIVENI TURBINES
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ECONOMIC ANALYSIS
Economic Factors India ranks Third in Power Generation in
world. An unpretentious growth of 0.4% has
been observed in the IIP due to strong
escalation in electricity generation.
Vision 2022: To make India the country of
choice for the production of electrical
equipment and reach an output of US$100
billion by balancing exports and imports.
GDP growth The economy in the direction of its potential
real GDP growth of 8% to 10%.
Forecasted a growth rate of 6.75% to 7.5%
for FY18
Inflation Inflation rate declined from 3.78% (2015) to
2.36 (2017). In 2017, prices grew at a faster
pace for power (4.86% from 4.54%)
Electric industry is directly proportional to
inflation rate and there is simultaneous
increment in demand of the power.
Monetary policy
including interest rates
(past & present)
Repo rate is 6.25% & Reverse Repo Rate is
6%, both unchanged so there is no major
impact on the industry.
The industry is likely to perform as it has
been performing.
Last union budget
2017-18
₹4814Crores allocated in electrification, which
is 43% increment than last FY.
There is high scope of expansion of
electrical equipment industry in terms of
equipments as well as service.
Other government
policies
Goal: POWER FOR ALL &Promote green
energy. Aim: Make India an investment hub
for manufacturing and installation of electrical
instruments.
The industry is likely to have favorable
conditions from the government point of
view.
INDUSTRY ANALYSIS
Industry Electrical Instruments Demand of the industry is in uptrend with
CAGR of 6.21%.
Product/service of the
industry
The projection is to provide direct
employment to 1.5 million people and
indirect employment to 2 million by 2022.
The service is likely to increase which
implies productions of instruments will
also increase
Industry life cycle The electrical industry is near growth and
maturity stage as the demand is still
growing but the demand CAGR depleted
as compared to previous years.
The industry have to face several
challenges to maintain the value
Operating & financial
leverage
Average financial leverage declined to
1.59 as compared to previous FY. Average
operating margin for FY17 is 24.8
There is constant decline of the leverages
so the firm is concentrating towards more
profit making.
Players Major players are Triveni Turbine, Havells
India, V Guard Ind, CG Powers, Bharat
Bijlee and Techno Electrics.
The Triveni Turbine is in top 5 of the
Electrical Equipments Industries.
Performance of the
industry (last 3-5 years)
Revenue-13.05%; ROE-35.50%; ROA-
18.97%, Sales Growth-13%; EPS- 21.99%
The industry is showing the direction of
increment so it is highly likely to follow
the same path.
Stock performance (NSE) -P/E is 37.51
-Havells India: Total Income: 6,325.25Cr,
EPS: 8.63Cr
-V Guard Ind: Total Income: 2,219.04Cr,
EPS: 3.57Cr
-Triveni Turbines: Total Income:
758.03Cr, EPS: 3.52Cr
There is very much a competition among
the industries, for sustaining in the market
the company needs more improvement.

3. KIRTI SHUBHAM, 1318015 TRIVENI TURBINES
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COMPANY ANALYSIS
Company Triveni Turbine Future prospect
Key business - Manufacturing/Exporting/Aftermarket
services of Turbines are the key business
- 49 Years of experience (Since 1968)
- Substitute: Siemens Ltd.
With the Vision 2020 formed by the
government there will be continuous
demand of product as well as services in
future.
The domestic market is a duopoly where
60% market share is owned by Triveni
Turbine and rest Siemens having the
balance.
Stake Promoters: 74.97%, Individuals: 4.51%,
Institutions: 7.53%, FII: 11.16%, Govt.:0.00%,
Others: 1.83%
Since major percentage of stakes is with
the promoters and their actions can be
traceable so this would be a good stock
which results in large percentage of
holdings.
Promoters Dhruv Manmohan Sawhney: MBA from the
Wharton School, University of Pennsylvania.
He was a past president of the Confederation
of Indian Industry, the Indian Sugar Mills
Association and the Sugar.
Subhadra Trade & Finance Limited: No. of
shares 87,330,417.
Tarun Sawhney: MBA from The Wharton
School, University of Pennsylvania, USA.
Experience in the fields of agriculture,
manufacturing, telecommunications,
information technology and financial and
portfolio analysis.
The company is under the group of
promoters who have knowledge of
technical as well as business oriented
which is very important to guide the
company in correct directions and mark the
shortfalls.
Business group - Subsidiaries include GE Triveni Ltd (GETL),
Triveni Turbine Europe Pvt Ltd (TTEPL) and
Triveni Turbine DMCC (TTD).
- Applications include co-generation,
combined heat and power, waste heat recovery
and combined cycle power plant, incidental
power generation from incineration, captive
power plant, independent power producer and
non-conventional energy sources. Businesses
of the group
- Status: NSE Listed & BSE Listed
The company is into several businesses
inside electrical equipments moreover
listed in the secondary market which
implies the company is diversified in a
sector there is high security of demand.
Governance The attainment of a high level of transparency
and accountability in the functioning of the
Company and conduct of its business
internally and externally & is also in
compliance with the requirements of the
guidelines on Corporate Governance stipulated
in Clause 49 of the Listing Agreement with the
Stock Exchanges.
The company follows it’s ethics and
performs peacefully following its corporate
governance moreover there is no allegation
on anyone related to the company so there
is a signal of smooth functions.
Growth (3 to 5 years) Sales growth- 13%, EPS growth- 21.99% There is constant growth is anticipated
however this growth in FY17 is lesser than
FY18.
Financial performance
(3 to 5years)
ROE- 35.05%, ROA- 18.97%, D/E ratio- 0.03 The financial status is in the stage of
content improvement so there is chance to
follow the same in future.

4. KIRTI SHUBHAM, 1318015 TRIVENI TURBINES
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Stock market - Current price : 13.65 and Average price:
11.93
- All time High: 157.1 & Low: 90.1
The prices are fluctuating within small
range and current price is near the low so
the price might tend to go up.
Future plan The Company has plans to diversify into
different types of steam turbines and other
renewable energy products focusing on high
efficiency cycles.
It also plans to cover other international
markets where the Company has sold its
products.
The expansion of the company can be
predicted with the profitability of the stake
holders.

5. KIRTI SHUBHAM, 1318015 TRIVENI TURBINES
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Summary of DCF Valuation
Parameters Explanation/justification
Name of the company Triveni Turbines
Industry Electric Equipment
Base year of projection 2017
Whether the base year is
normal or not?
Base year is normal as the FY17 report is referred for the valuation
purpose
How many years of
projection?
3 years
Historical growth rate 4.44%
Growth rate for
projection (How is it
estimated)
Growth rate is estimated by using historical revenue of FY16 & FY17
Whether the historical
growth rate is same as
projected or different?
Justify
Growth Rate is 7.03% as in report but the estimated growth rate is
2.59% less than the report issued by the company.
Growth rate of other
parameters (i.e.
depreciation, Capex,
change in WC)
Depreciation 14.80%
Change in WC to sales 3.71%
Capex to sales 3.41%
Tax rate (how is it
estimated)
Tax Rate is calculated by summation of Income Tax, Deferred Tax and
few other applicable taxes
Average ROE 34.7%
Average retention ratio 87.22%
Risk free rate 6.86%
Market risk premium 1.70%
Equity ratio 17%
Debt ratio 83%
Cost of equity 5859.60 Millions
Cost of capital 1.62%
Stable growth rate 4.44%
Terminal value 41501.60 Millions
Value of equity 5859.60 Millions
Value per equity share 17.758 Millions
Market value per equity 4.2 Millions
Value of the firm ₹ 58,616.04 Millions