Partner With Us NRI
Triveni Engineering and Industries Ltd>
  • CMP : 238.8 Chg : 0.15 (0.06%)
  • Target : 350.0
  • Target Period : 12 Month

17 May 2022

Distillery capex completion to drive profits…

About the stock

Triveni Engineering (TEL) is one of the largest sugar companies in India with sugar crushing capacity of 60,000 TCD, distillery capacity of 520 KLD & co-generation power of 100 MW. It also has power transmission & waste water management business contributing 10% to revenues.

  • The company is increasing its distillery capacity from current 11 crore litre per annum to 22 crore litre per annum by FY24 to utilise B-heavy, grain & sugarcane juice route to produce ethanol
Q4-FY22 Results

TEL reported strong earnings growth led by higher distillery sales.

  • Sales were down 7.8% YoY as TEL has not exported sugar in current season
  • EBITDA was at Rs 174.7 crore, up 6.3% YoY, with margins at 16.3%
  • PAT was at Rs 109.2 crore, up 28.4% YoY, led by higher profit from associates & lower tax provisioning
What should Investors do?

TEL’s share price has gone up 2.8x in the last five years (from Rs 90 in May 2017 to Rs 251 in May 2022).

  • We expect 36% volume CAGR in distillery to boost earnings with CAGR of 19% during FY22-24E
  • We maintain our BUY rating on the stock
Target price valuation

We value the stock at Rs 350, valuing the business at 14x FY24 PE

Key Triggers for future price performance
  • With distillery capex, TEL would be able to increase its ethanol volumes 1.9x to 22 crore litre by FY24. Distillery sales to see 40.7% CAGR to Rs 1262.2 crore in FY22-24E, which would be 26% of total revenues
  • Sugar segment profitability would improve with better realisation and the company’s strategy of not exporting sugar due to benign domestic sugar prices. We estimate sugar realisation of Rs 36 /kg in FY23-FY24
  • The company is expected to generate Rs 1530 crore of operating cash flow in the next two years, which would be utilised for ~Rs 500 crore capex, debt reduction, buybacks & dividends
Alternate stock idea

We also like Dwarikesh Sugar in our sugar coverage.

  • The company is one of the most efficient with highest sugar recovery and abundant sugarcane availability. It is increasing its distillery capacity to 3x in the next three years
  • We value the stock at Rs 145/share with BUY recommendation

Key Financial Summary

Key Financials FY20 FY21 FY22 5 Year CAGR % (FY17-FY22) FY23E FY24E (Blank) CAGR % (FY22-24E)
Total Operating Income 4,436.6 4,674.2 4,291.0 8.7 4,927.3 5,221.5 - 10.3
EBITDA 543.2 558.2 634.4 4.0 747.3 904.3 - 19.4
EBITDA Margin % 12.2 11.9 14.8 - 15.2 17.3 - -
Net Profit 335.1 294.6 424.1 10.9 489.9 600.6 - 19.0
EPS (Rs) 13.5 12.2 17.5 12.3 20.3 24.8 - 19.0
P/E 19.9 22.1 15.4 - 13.3 10.9 - -
RoNW % 19.9 18.9 22.4 - 21.7 22.3 - -
RoCE (%) 17.6 19.4 15.8 - 18.2 22.1 - -
Source: Company, ICICI Direct Research

Key takeaways of recent quarter

Q4 Y22 Results: Distillery volumes to grow ~1.9x by FY24
  • TEL saw a sales decline of 7.8% to Rs 1070 crore (net of excise) on the back of 14.7% de-growth in sugar segment sales. Sugar volumes were down 12.2% given the company chose not to export any sugar in current season as domestic sugar prices were remunerative for UP sugar millers
  • Sugar volumes dipped 12.2% to 1.98 lakh tonnes (lt) but sugar realisation was up 8.2% to Rs 34.99/kg. Sugar prices have been benign in last eight months as industry wide sugar inventories are coming down consistently
  • Distillery sales witnessed growth of 81.4% to Rs 283.7 crore on the back of higher ethanol volume & diversion towards B-heavy ethanol. Ethanol sales volume recorded growth of 23.8% to 2.7 crore litre. Distillery realisation was flat at Rs 56.8/litre. B-heavy ethanol contributed 93% of total ethanol produced during the quarter. IMIL sales volume grew 4.7x compared to corresponding quarter
  • Power transmission business & water business revenue saw growth of 26% & 25%, respectively, in Q4FY22. The outstanding order book for power transmission & water business was at Rs 221.3 crore & Rs 1512.8 crore, respectively, as on March 2022.
  • Operating profit saw growth of 6.3% to Rs 174.7 crore adversely impacted by lower sugar sales & increase in cost of production (due to hike in sugarcane prices & lower gross recoveries)
  • Interest cost increased 16.9% to Rs 14.6 crore given larger requirement of working capital as the company has not exported any sugar in the current season. Moreover, nearing completion of capacity expansion related to distillery led to increase in term debt as well
  • Profit after tax increased 28.4% to Rs 109.2 crore mainly on account of lower tax provisioning & higher profits from associates. The company declared a dividend of Rs 2/share
  • Sugarcane crushing is down 2% to 82 lakh tonnes (till May 13, 2022) with gross recoveries of 11.67%. Crushing is still continuing in three out of seven plants for TEL. The company expects similar crushing as last year & ~20-25 bps decline in sugar recovery the current season
  • The company is holding 5.15 lakh tonne of sugar valued at Rs 32.7/kg as on March 31, 2022. It expects to exhaust the current season sugar inventories by December-2022
  • Co-generation sale was down 9% to Rs 62.4 crore due to late start of crushing. Moreover, sugar millers are preferring to sell bagasse rather than producing saleable power
  • Ethanol sales volumes grew 23.8% to 2.7 crore litre in Q4. B-heavy ethanol constitutes 93% of the sales volume in Q4 as against 99% sales volume in corresponding quarter. However, on an annual basis, B-heavy ethanol constitutes 83% of the total volumes as against 55% last year
  • In a newly established IMIL business, sales volume was at 5.5 lakh cases. The company is utilising levy molasses quota for manufacturing of IMIL
  • TEL commissioned a 160 KLD multi-feed distillery at its Milak Natrayanpur Plant on April 4, 2022. It ran the new plant on sugarcane juice for 15 days in April. It has expanded its Sabitgarh distillery capacity by 40 KLD taking the company’s total distillery capacity to 520 KLD. Further expansion of 140 KLD capacity at different plants would commence by July 2022
  • The company has also announced capex of Rs 130 crore for the modernisation at three of its plants, which would enhance the existing crushing capacity by de-bottlenecking. With this capex, the company would be able to reduce the number of days of crushing from 2022-23 season onwards. Further, it has also announced Rs 80 crore capex for expansion of its power transmission business, which would be commissioned by March2023
  • Sugarcane area under cultivation is likely to increase 1.5% in the next season. However, sugarcane area for TEL is likely to increase by 5%. Moreover, it expects 8% increase in planting for the company. In its grain based distillery (60 KLD likely to get commissioned by July 2022), the company is likely to procure grain from FCI.
  • The total debt for the company has increased by Rs 560 crore on account of faster payment to the farmers, higher working capital requirement due to absence of exports & increase in term loan with capex nearing completion. Its total debt stands at Rs 1503.8 crore. With the significant increase in domestic quota, sugar inventories are likely to get liquidated in the next six to seven months, which would considerably reduce the debt for the company
  • The company has decided to divest 21.85% equity holding in Triveni Turbine for value unlocking & monetisation of non-core assets. The proceeds from the divestment would be utilised for expansion of business & shareholder pay-out

Terms & conditions and other disclosures


I/We, Sanjay Manyal MBA (FINANCE) Research Analyst, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. It is also confirmed that above mentioned Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months and do not serve as an officer, director or employee of the companies mentioned in the report.

Terms & conditions and other disclosures:

ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products.

ICICI Securities is Sebi registered stock broker, merchant banker, investment adviser, portfolio manager and Research Analyst. ICICI Securities is registered with Insurance Regulatory Development Authority of India Limited (IRDAI) as a composite corporate agent and with PFRDA as a Point of Presence. ICICI Securities Limited Research Analyst SEBI Registration Number – INH000000990. ICICI Securities Limited SEBI Registration is INZ000183631 for stock broker. ICICI Securities is a subsidiary of ICICI Bank which is India’s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. (“associates”), the details in respect of which are available on www.icicibank.com. 

ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities and its analysts, persons reporting to analysts and their relatives are generally prohibited from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. 

Recommendation in reports based on technical and derivative analysis centre on studying charts of a stocks price movement, outstanding positions, trading volume etc as opposed to focusing on a companys fundamentals and, as such, may not match with the recommendation in fundamental reports. Investors may visit icicidirect.com to view the Fundamental and Technical Research Reports. 

Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. 

ICICI Securities Limited has two independent equity research groups: Institutional Research and Retail Research. This report has been prepared by the Retail Research. The views and opinions expressed in this document may or may not match or may be contrary with the views, estimates, rating, and target price of the Institutional Research. 

The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. 

This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. 

ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. 

ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. 

ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. 

ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its associates or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts and their relatives have any material conflict of interest at the time of publication of this report. 

Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. 

ICICI Securities or its subsidiaries collectively or Research Analysts or their relatives do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. 


ICICI Direct endeavours to provide objective opinions and recommendations. ICICI Direct assigns ratings to its stocks according -to their notional target price vs. current market price and then categorizes them as Buy, Hold, Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts valuation for a stock

Buy: >15%

Hold: -5%to 15%;

Reduce: -15% to -5%;

Sell: <-15% 

Pankaj Pandey

Head – Research




ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093





Read More