>Kalpataru Power Transmission (KARVY)

● New order worth Rs3.73bn from Power Grid: Kalpataru Power Transmission Ltd (KPTL) announced on 4th March 2009, that the company has bagged orders worth Rs 3.73bn from Power Grid Corporation of India Ltd (PGCIL) for supplying power transmission equipment in India. This order is to supply and erect transmission towers for 413 Kms and provide 765 KV S/C transmission lines associated with Sasan Ultra Mega Power Project for Silwar-Satna and Satna-Bina section in Madhya Pradesh. This is followed by a large order worth USD 250 mn (Rs 12 bn) from Ministry of Energy and Water, Kuwait during January 2009. Including the new order from PGCIL, total order book of KPTL (standalone) is ~ Rs 48bn (including L1) with an average execution period of 22 months. The latest project secured from PGCIL is expected to commence from March 2009 and scheduled to be completed within 27 months. Hence, we expect partial revenue to be booked in FY10 and remaining in FY11.

● Valuation: Current order book of standalone- KPTL entity is 2.5x it FY09E sales. Hence, we remain positive on the revenue visibility in future. However, margin pressure is likely to remain in medium term. We maintain our revenue and earnings estimates and retain our price target of Rs 284, based on 4.5x FY10 earnings. However, owing to recent price correction, we upgrade our rating from Market performer to BUY.

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