smallcase manager Basant Maheshwari is betting on this stock.
India’s installed renewable energy capacity is the fourth largest in the world. The Government is committed to increased use of clean energy sources and is already undertaking various large-scale sustainable power projects and promoting green energy heavily. As per media reports and data from Ministry of New and Renewable Energy, India’s installed renewable energy capacity (including hydro) was 161.28 GW as of July 2022, accounting for 39.91% of the nation’s total installed power capacity. The installed capacity for renewable energy has increased at a CAGR of 15.92% between FY16-22.
India’s renewable energy sector is expected to attract investment worth US$ 80 billion in the next four years.
Why is Basant Maheshwari betting on Triveni Turbine through his BM Vision 2030 smallcase –
- More than 50% market share in the domestic 30 MW steam turbine segment.
- Exited the JV with GE to increase its market share further.
- Venturing into the high margin API segment
- Has recorded the highest-ever order booking of Rs. 1,180 crores in FY22.
- Virtually a debt-free company
- Management expects revenue growth of 35% in FY23 and FY24.
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Triveni Turbine is a market leader with more than 50% market share in the domestic 30 MW steam turbine segment. A healthy capex revival in the domestic market has been instrumental in the sharp upsurge in Triveni’s order inflows. Also, due to the higher energy prices in Europe, there has been an urgent need to invest in the domestic renewable and energy sector. This has also led to higher demand for turbines.
The company has a strong aftermarket segment and overseas business, while the domestic market is also showing distinct signs of pickup. It is getting lots of inquiries from markets like Southeast Asia, Europe, West Asia and North America.
It had a JV with GE for steam turbines in the high margin 30 – 100 MW range. It recently exited this JV to increase its market share in this segment directly. It has also ventured into the high margin API segment. Growth in these businesses should expand margins in the mid to long term.
Triveni Turbine recorded the highest-ever order booking of Rs. 1,180 crores in FY22. The company has bagged orders in both domestic and international markets and has a good inquiry pipeline from sectors such as process industries, co-generation and steel.
It is virtually a debt-free company with limited capex requirements and an efficient working capital cycle which reflects in very healthy return ratios.
The management expects revenue growth of 35% in FY23 and FY24.
We believe that the high growth, reasonable valuations and high return ratios make Triveni Turbines one of the best ways to play the capex cycle for the next 3-5 years.
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