TRIVENI - Triveni Engineering & Industries Ltd Share Price

Management Outlook:
Triveni Engineering anticipates improved performance driven by rising sugar prices, policy support, and strategic expansions. Key expectations include:

1. Sugar Business: Firm sugar prices due to lower production estimates and exports. Recovery rates expected to improve, with a 15% YoY increase in cane crush. Awaiting MSP revision to support margins.
2. Ethanol: Margin recovery anticipated with revised pricing for C-heavy molasses and FCI rice availability. Grain-based ethanol viability hinges on policy adjustments.
3. Engineering (Power Transmission): Strong growth outlook with a record Rs.2,356 crore order book. Rs.60 crore capex to boost capacity to Rs.700 crore by 2026. Defense sector orders and exports are key drivers.
4. Water Business: Focus on recycling/reuse projects and international tenders. Order book at Rs.1,979 crore, including O&M contracts.
5. Value Unlocking: Progress on the Composite Scheme (amalgamation of SSEL and PTB demerger) to enhance shareholder value, expected by end-2025.

Major Points:

• Sugar Prices: Current ex-factory prices at Rs.41.8/kg (refined); expected to remain firm amid tight supply.
• Ethanol Blending: Targeting 20% blending, with UP leading. Contracts for 930 crore litres in ESY 2024-25 (+38% YoY).
• Debt & Costs: Consolidated net debt at Rs.960 crore; cost of funds at 5.6%.
• Defense Expansion: New facility delayed to 2025, aiming for indigenization and market gains.
• Policy Impact: Export quota (32,000 tonnes allocated) and rice sales at Rs.2,250/quintal to aid feedstock availability.

Management remains cautiously optimistic, emphasizing operational efficiency and policy alignment for sustained growth.

Question 1:
Sudarshan Padmanabhan (JM Financial): My question is to understand a little bit more on the ethanol spreads. I mean, the distillery business has seen a fair amount of profitability getting impacted. Now that the FCI procurement of rice has been announced, and they have also announced the C-heavy ethanol price. Two things. One is, do you think that the prices would be good enough for you to see a better spread? And number two if you can give some colour on the ethanol volumes going forward? I mean in terms of whether the 20% blending is going to happen, how it translates into better volume.

Answer Summary:
Ethanol margins are expected to improve due to higher C-heavy molasses prices and anticipated lower maize costs with increased FCI rice availability. Ethanol volumes are projected to rise as blending targets (e.g., 16.4% achieved as of Dec 2024) progress, supported by policy tailwinds. The Company anticipates margin expansion in coming quarters but notes grain-based ethanol profitability remains pressured without further price revisions.

Question 2:
Sanjay Manyal (DAM Capital): Hi, just a few questions on recovery part. You said it's almost 60 basis points down on gross recoveries. What is the estimate of what it will settle at, after the crushing season and the cost of production, which is at Rs.38.8, and I'm assuming here that the entire inventory is of the current season only, by what rupee it can come down, whether it will settle at Rs.36 or Rs.37 means, what is a broader estimate?

Answer Summary:
Recovery started lower due to weather and crop health but is narrowing the gap (from -0.82% to -0.6%) as plant cane arrives. Full recovery catch-up is unlikely, but production costs will moderate. Inventory includes current and prior seasons. Cost reductions will depend on improved recovery trends but specific figures are not disclosed.

Question 3:
Shailesh Kanani (Centrum Broking): Good afternoon, everyone. And thanks for the opportunity. Just wanted to understand on our stand-alone Triveni crushing numbers. Correct me if I am wrong, last season, we had around decline of around 11-odd percent from 9.3 to around 8.3 million tonnes. So, this year, we would be recouping that loss ground. I know you have given a guidance on the consol basis. But on a standalone, will we recoup that loss grown of around 11%, what we had last time?

Answer Summary:
Standalone crushing will recover a portion (not all) of the 11% decline from last season. Consolidated crush (including SSEL) is projected to grow 15% YoY. Delayed season start (due to late Diwali and crop testing) impacted initial volumes, but plant cane arrival has normalized operations.

Question 4:
Bharat Shah (ASK Investment Managers): Hi Tarun. My question is not really about this quarter, but over a little longer span. If you look at the composition of various businesses that we are in, barring the Power Transmission business, which is relatively more robust, predictable economics and predictable outcomes over a period of time, brick-by-brick being built. On a shorter-term basis, interplay of the other businesses always produces a very mercurial kind of an outcome, sometimes to delight, but other times to depress.

Answer Summary:
Volatility in Sugar/Water businesses stems from policy dependencies, but long-term optimism remains. Ethanol and Sugar sectors benefit from structural policy shifts (e.g., MSP, EBP program) that stabilize cycles. Power Transmission's R&D-driven growth and Defence diversification aim to balance portfolio volatility. Cautious optimism is warranted given regulatory support and agriculture's strategic importance.

Question 5:
Somnath Saha (B&K Securities): Hi, thank you for the opportunity. My question is on the, as the Government has allowed the FCI rice ethanol, so when we can expect the impact to come from? And what could be the optimal mix of feedstock, if you can put some light on that?

Answer Summary:
FCI rice impact will materialize in a few months post-tender finalization. Optimal feedstock mix (maize, FCI rice, molasses) will depend on tender outcomes and pricing. Grain-based ethanol currently dominates (64% of contracts), but FCI rice offers better margins vs. maize. Exact split details will be shared post-tender clarity.

Question 6:
Resham Jain (DSP Asset Managers): Yeah, hi. Good afternoon. So, I have two questions. The first one is on the Power Transmission and the investment which you have announced Rs.60 crore. Is it just related to the pure Gear business? Or does it include investment related to Defence as well?

Answer Summary:
The Rs.60 crore capex is solely for Gears capacity expansion (to Rs.700 crore by Sep 2026), not Defence. Defence remains part of PTB, with its facility delayed to 2025. Growth in exports/aftermarkets and OEM certifications drive PTB's outlook, with Defence synergies leveraging existing infrastructure post-demerger.

Question 7:
Maulik Chaudhari (Monarch Networth): Just I have two questions on Power Transmission business. First is can you please share an estimated timeline for the demerger to happen? And secondly, can you talk about the total addressable market for this segment globally?

Answer Summary:
Demerger timeline: NCLT approval expected by end of 2025. Global addressable market for high-speed/turbo gears is ~$650-700 million, dominated by European players. Triveni aims to capture export/aftermarket opportunities with indigenous tech and defence diversification.

Question 8:
Udit Gupta (Investor): Good afternoon. My question is, when is our Defence facility coming online?

Answer Summary:
Defence facility (multimodal) is delayed to late 2025 due to machinery procurement delays. Revenue projections are undisclosed, but the facility supports propulsion gearboxes and diversified defence applications, enhancing long-term capability.