Key takeaways of the call

Q1FY17 performance of the company is strong with consolidated sales turnover up by 30% and PAT up by 33% compared to corresponding previous period. The company has adopted IND AS standards and its results will now be on a consolidated basis.

Aftermarket revenues grew substantially by 60% during Q1FY17 and now accounts for 28% of total sales as against 23% in the corresponding period of last year.

The shift in focus to exports, which was started two years ago, has now started showing good results. Exports contributed 59% of total sales compared to 33% last year. Consolidated export sales stood higher by 137% up Rs 96.2 crore.

The outstanding consolidated order book (without GETL) as on June 30, 2016 stood at Rs 657.5 crore, marginally down by 1%yoy. Of the total order book domestic orders were Rs 316.9 crore (down 31%yoy) and export orders was Rs 340.6 crore (up 67%yoy). Exports now contribute 52% of orders on hand versus 31% in Q1FY16.

Order inflow in Q1FY17 was down by 18%yoy to Rs 152.8 crore with domestic orders being Rs 64.7 crore (down 28%) and export orders being Rs 88.1 crore (down 8%yoy). Aftermarket service order inflow stand at about Rs 46 crore, a increase of 17%yoy. The company has good pipeline of enquiries which it expects to conclude in the subsequent quarters.

Total domestic market has declined by 50% in Q1FY17. The domestic market has shown a larger decline than it had earlier forecast. The company is hopeful that this situation will reverse by the end of FY17 or early FY18. However, the company is confident of compensating for this slow down with the order booking in the export market through enquiries which are in advanced stages of finalization. It is confident of increasing orders in hand by the end of FY17 after achieving its forecast growth in Sales.

The economic situation in most developed and developing countries is leading to some slow-down in order finalization but the company is fortunate that the sectors where it operates, are showing better signs of growth than the general industry indicators.

Sectors such as Sugar and Process Co-generation, Combined Cycle and Waste to Energy and Biomass are not impacted by slowdown globally. The company's strategy of concentrating on these sectors is now helping in smoothing the variations in demand in any particular segments or countries.

In some export markets, order finalization is taking longer, but enquiry generation on a quarterly basis has been higher by 15%. Certain geographies like Europe and South East Asia are showing good growth in enquiries. The marketing team is confident that the muted order booking in Q1FY will be more than compensated in the coming quarters, and the company still holds the view that international order booking in FY17 will be higher year on year.

In the export market, the renewable sector is driving demand specifically from the Biomass and Waste to Energy projects. Some of the segments of focus are biomass, paper, process co-generation and palm oil apart from the newly entered segments such as waste to energy, combined cycle etc.

The Company has currently orders and installations in over 50 countries and will be focusing on new markets in the coming years. The company is looking to add another 12 offices/service centers.

The company has increased its focus on aftermarket services globally and this is showing positive results. Its overseas offices are contributing well to this effort. To sustain aftermarket growth the company is adding resources to its current export centers and formulating plans for opening new centers in diverse geographic locations.

The slowdown in domestic market is across the segment. The enquiries are encouraging but no conversion.

The demand from the sugar sector is expected to grow across territories on account of a turnaround in the global sugar sector economics. Sugar viability has improved and some of the companies in domestic sugar sector can start investing in co-generation plants much earlier than 2 year.

Domestic market: 100 MW in Q1FY17 and it will not go beyond 700 MW per annum even it picks steam.

Forex gain is lower in Q1FY17 compared to corresponding previous quarter. This has impacted the other income.

Better value proposition to customers and combined with international service centre have facilitated the company to snatch market share from developed, developing and domestic player globally.

Operations at GE Triveni, a JV company between TTL and GE are progressing well. Sales for the quarter stood at Rs 53.3 crore. Order book of GE Triveni is over Rs 100 crore. The company also faced with orders postponed from Q1FY17 and the company has got 2 orders in July 2016. In the next few quarters the first large size turbine is expected to be commissioned in SE Asia, which will be good reference point for the company.

Together with GETL's pipeline of enquiries leads us to expect good order booking for the full year.

Given rapidly increasing exports and aftermarket operations as well as strong order book and enquiry pipeline, it believe the growth rates in performance of the Company in FY17 will be good and meet its expectations.

Product sale for Q1FY17 was up by 21%yoy and aftermarket service was up by 60%yoy.