Triveni Engineering soars 6%, hits new high on healthy business outlook

The company's grain-based distillery of 60 KLPD is expected to commence its operations in Q4FY22, which is likely to strengthen its operational profile and improve revenue diversification.

Shares of Triveni Engineering & Industries (TEIL) hit a new high of Rs 269.35, on soaring 6 per cent on the BSE in Wednesday’s intra-day trade on expectations of a healthy growth in operating profits as well as strengthening of debt protection metrics in FY2022 and FY2023.

The stock surpassed its previous high of Rs 267.25 hit on Monday, January 17, 2022. At 10:25 am; the stock was up 5.5 per cent at Rs 267.50, as compared to 0.70 per cent decline in the S&P BSE Sensex. In the past one month, the stock had gained 21 per cent, as against a 6 per cent rise in the benchmark index.

TEIL on Tuesday informed that the rating agency ICRA reaffirmed the ratings for existing bank facilities & enhanced commercial paper limit of the company. The outlook on the long term rating is stable.

ICRA expects the company’s revenues in FY22 to remain stagnant, notwithstanding higher revenues from the distillery division, offset by lower sugar volumes (both domestic and exports). Further, higher sucrose diversion towards B-heavy molasses/juice-based ethanol would moderate the inventory levels and hence lower its working capital borrowing levels going forward.

Additionally, TEIL has forayed into production of country liquor in FY21, thus, further facilitating forward integration. Moreover, TEIL’s grain-based distillery of 60 kilo litres per day (KLPD) is expected to commence its operations in Q4FY2022, which is likely to strengthen its operational profile and improve revenue diversification.

Further, ICRA notes that the introduction of the minimum support price (MSP) for sugar in FY2019 gives some protection against any downside in the operating profits in sugar surplus years compared to the past. Over the medium term, TEIL’s operating profits are likely to be less volatile than the historical levels, driven by the expected continuation of MSP and the industry’s focus on diverting of excess cane towards ethanol production.