Margin Pressure Despite Revenue Growth

Triveni Turbine's latest quarterly results showed a 26.3% year-over-year rise in revenue. However, the company's EBITDA margin contracted by 354 basis points to 18.8%. This was mainly due to an unfavorable project mix, a lower contribution from aftermarket services, and the completion of low-margin orders for NTPC's energy storage solutions.

Strong Order Pipeline Continues

Despite margin challenges, Triveni Turbine secured Rs 7.5 billion in new orders, marking a 19% increase from the previous year. This strong inflow was driven by high demand from exports and consistent performance in aftermarket offerings. The company's overall inquiry pipeline has significantly improved, with global product inquiries reaching about 18 GW and domestic inquiries doubling to around 7 GW. This growth is supported by investments in thermal power, industrial projects, renewables, and increasing demand for power solutions for data centers.

Growth Outlook Positive

Management expects exports to surpass domestic business by FY27, benefiting from a more favorable conversion environment despite global geopolitical concerns. New growth areas such as geothermal, ORC, CO2-based energy storage, heat pumps, and opportunities linked to SMRs are gaining traction, especially in the US and Southeast Asia. Data center-related opportunities are a significant part of the current inquiry pipeline, fueled by the need for combined-cycle power infrastructure and AI-driven energy investments. The aftermarket and API turbine businesses are also showing strong momentum. Triveni Turbine's US subsidiary is expected to become profitable by FY27, supported by better operating leverage and rising local demand.

Rating Change and Valuation

Prabhudas Lilladher has revised its rating for Triveni Turbine from 'Accumulate' to 'Hold' following the stock's recent rally. The firm has updated its valuation to March 2028 estimates, applying a price-to-earnings (P/E) multiple of 38x for Mar'28E earnings, an increase from the previous 37x for Sep'27E. This adjustment results in a new target price of Rs 638, up from the previous Rs 585.