Triveni Engineering and Industries Ltd: Pioneering Sugar Industry & Manufacturing.

Stock Data:

Ticker	NSE: TRIVENI
Exchange	NSE
Industry	SUGAR & MANUFACTURING

Price Performance:

Last 5 Days	-2.06%
YTD	+2.11%
Last 12 Months	+11.61%

Company Description:

Triveni Engineering & Industries Limited (TEIL) is the largest integrated sugar manufacturer in India and a market leader in the engineering business, specializing in high-speed gears, gearboxes, and water and wastewater treatment solutions. The company operates seven sugar mills located in various regions of Uttar Pradesh, namely Khatauli, Deoband, Sabitgarh, Chandanpur, Rani Nangal, Milak Narayanpur, and Ramkola. TEIL also has manufacturing facilities for gears in Mysuru and for water and wastewater treatment solutions in Noida. The company operates six co-generation power plants across five sugar units and two molasses-based distilleries in UP.

Critical Success Factors:

• The company’s extensive presence in the sugar industry, with seven sugar mills and a strong market share, provides a solid foundation for its operations. The company’s diversified business portfolio, including the engineering business and water and wastewater treatment solutions, helps mitigate risks and provides opportunities for growth.
• TEIL’s engineering business has shown strong growth, crossing the Rs. 500-crore mark in FY2023. With revenues of Rs. 577 crore, both the Water and Power Transmission businesses recorded year-on-year growth of 30.3% and 22% respectively. The outstanding order book for the combined engineering businesses stands at an impressive Rs. 1,654 crore.
• The company invests in research and development to enhance its product offerings and stay ahead of the competition. This commitment to innovation has helped TEIL maintain its market leadership in high-speed gears, gearboxes, and water and wastewater treatment solutions.
• The company aims to expand its presence in the distillery business by focusing on ethanol production and exploring new market opportunities. It plans to enhance its ethanol capacity through greenfield and brownfield expansions. TEIL is also exploring opportunities for backward integration to improve its sugar business’s profitability and reduce dependency on external factors like sugarcane prices.
• In the engineering business, the company aims to further consolidate its position as a market leader in high-speed gears and gearboxes. The company plans to focus on expanding its product portfolio, enhancing manufacturing capabilities, and increasing its presence in both domestic and international markets.
• TEIL is committed to sustainability and environmental stewardship. The company aims to reduce water consumption, enhance energy efficiency, and promote waste management and recycling practices across its operations.

Key Challenges:

• The volatility in sugar prices, which can impact the profitability of the sugar business. Fluctuations in sugarcane prices and government policies related to the sugar industry can pose challenges for TEIL’s sugar operations.
• The engineering business is subject to market risks, including competition from domestic and international players. Changes in customer preferences, technological advancements, and economic conditions can influence the demand for engineering products and services.
• The company faces risks related to regulatory and environmental factors, especially in the water and wastewater treatment solutions business. Compliance with regulatory requirements and evolving environmental standards can impact the company’s operations and profitability.

Financial Results:

In Q4FY2023, TEIL reported strong financial results. The company’s revenue grew by 52.5% year-on-year to Rs. 1,818.3 crore, driven by the distillery business, which grew by 2.1 times year-on-year. The sugar business also showed significant revenue growth of 38% year-on-year, while the engineering business grew by 12% year-on-year. However, gross margins decreased by 674 basis points year-on-year to 29.4% due to a change in product mix. EBITDA margins remained flat at 14.5%. The company’s operating profit grew by 51% year-on-year to Rs. 263.3 crore, and the adjusted PAT increased by 74.3% year-on-year to Rs. 190.3 crore. For FY2023, TEIL recorded a revenue growth of 34.4% year-on-year to Rs. 6,310.1 crore, driven by strong performance across its businesses. However, EBITDA margin declined by 375 basis points year-on-year to 16.3% due to the impact of higher cane prices and lower sugar prices. The company’s net profit for FY2023 stood at Rs. 318.9 crore, reflecting a growth of 61.8% year-on-year.

Conclusion:

The company’s strong market presence, diversified business segments, and focus on innovation position it well for future growth. Despite challenges in the sugar industry, TEIL has managed to deliver strong financial performance, with significant revenue growth in FY2023. The engineering business has been a key driver of growth, and the company’s strategic initiatives in the distillery business and focus on sustainability further enhance its growth prospects. However, margin pressures in the sugar business, regulatory risks, and market competition remain concerns that need to be addressed. TEIL’s ability to adapt to changing market dynamics, invest in research and development, and maintain operational efficiency will be crucial for its long-term success.