On December 7, Triveni Engineering & Industries Limited’s shareholders approved a restructuring plan that could reshape how the market values this diversified company.
The plan is simple: merge a recently acquired sugar business into the parent and spin off the high-margin power transmission (gearbox) division into a separately listed company.
Triveni operates across sugar and ethanol, water treatment plants, and precision gearboxes. This diversity has created a valuation puzzle. The market struggles to price businesses that move at different speeds, earn vastly different margins, and appeal to entirely different types of investors.
For investors, the question is straightforward: Does this split unlock meaningful value, or has the market already priced it in?
Think of Triveni as a corporate puzzle with mismatched pieces. The numbers from the latest quarter paint a stark picture.
Fig2: Source: Company Presentations
In the September 2025 quarter, Triveni’s sugar business generated Rs 1,215 crore in revenue but operated at a negative 1% margin. The distillery business reported Rs 705 crore in revenue at 4% margins, and water projects added Rs 54 crore, also at 4%.
Then there’s power transmission, which reported just Rs 110 crore in quarterly revenue, a mere 5% of the total, but is running at 42% PBIT margin.
That margin gap explains a lot.
Sugar and ethanol are cyclical, capital-hungry, and heavily influenced by the government’s pricing and blending mandates. Water projects are lumpy and dependent on state tenders. Meanwhile, the gearbox business is a precision engineering play serving industrial and defence clients with margins that most manufacturers can only aspire to.
When all of this sits under one listed entity, the market doesn’t know how to value the stock.
Should the stock trade like Balrampur Chini at 1.5 times sales? Or like Elecon Engineering at 24 times earnings?
The result is a blended, middling valuation that potentially undervalues the gearbox business while perhaps overvaluing the sugar and water businesses combined. This is the conglomerate discount in action, and Triveni is betting that the demerger will help unlock its fair value.
The demerger plan: Two steps, one goal
Triveni’s restructuring isn’t a run-of-the-mill demerger. It’s a two-part composite scheme that consolidates the sugar assets and separates the gearbox business.
The first step involves merging Sir Shadi Lal Enterprises Limited (SSEL), a sugar company Triveni acquired in 2024, into the parent TEIL.
SSEL shareholders will receive 100 Triveni shares for every 137 SSEL shares. The logic is simple: before spinning off gearboxes, consolidate all sugar operations to create a cleaner, more focused entity.
The second step is where it gets interesting. Once the merger is done, Triveni will carve out its power transmission business into a new company called Triveni Power Transmission Limited (TPTL). But here’s the twist: Triveni will retain 30% of TPTL even after the demerger. The parent keeps skin in the game, maintaining strategic control while giving the power transmission business the independence it needs to grow.
For shareholders, the structure is simple: for every three Triveni shares held, they’ll receive one share of TPTL.
Fig 3
The timeline is moving forward. Shareholder approval came in a few days ago.
The final sanction of the scheme requires the submission of the meeting results and a final approval order from the NCLT. Management expects the scheme to be effective by the fourth quarter of this fiscal year, with TPTL listing by Q4 FY26 or Q1 FY27.
One practical detail matters: Triveni’s consolidated debt of Rs 753 crore will be split between the two entities based on their respective asset bases. Given that the power transmission business is capital-light, most debt will likely stay with the sugar and distillery businesses.
Triveni ran this playbook in 2010 when it spun off its steam turbine division into Triveni Turbine Limited.
Back then, the turbine business was just another division buried inside a sugar company. Today, TTL has a market cap of Rs 16,927 crore, more than double Triveni Engineering’s Rs 7,841 crore valuation.
The outcome wasn’t accidental. When you give a high-quality, focused business its own identity, management attention, and capital allocation framework was able to attract engineering-focused investors, build a dedicated analyst following, and execute its strategy without being weighed down by sugar’s cyclicality.
The power transmission demerger is betting on a similar outcome: that focus creates value in ways a conglomerate structure simply can’t.
The valuation math: Is there an upside?
On the surface, Triveni doesn’t look cheap. It trades at 30 times earnings and 14.6 times EV/EBITDA. But those consolidated numbers mask what’s really happening inside.
To figure out if there’s hidden value, each business needs to be valued as the market will after the split, i.e, separately.
Fig 5: Source: Writer estimates / Factual figures from company presentations/filings
Note: This is not indicative of where the stock price/market cap could head. It’s just an if-then calculation for academic purposes.
Sugar and distillery operations are cyclical, regulated, and capital-intensive. Indian sugar stocks trade between 0.5 and 1.5 times sales depending on the cycle and integration levels. A conservative 1x multiple makes sense given Triveni’s scale and integrated ethanol operations.
Water EPC is small but growing, with an order book of Rs 1,520 crore. Peers like VA Tech Wabag and ION Exchange trade around 14-15 times EV/EBITDA, but given Triveni’s smaller scale and project lumpiness, a conservative 1x sales multiple is reasonable.
The power transmission business is where the hidden value likely sits. With margins in the 36-42% range (the recent 42% was exceptional, but even the half-year average of 36% is stellar), power transmission is a capital-efficient, high-return business.
With significant capital being allocated towards ship-building and its existing product profile in marine engineering, this transmission business could be setting up for reasonable growth. The current multiples are based on trailing multiples and suggest a potential upside based on current numbers. They do not factor in the growth that can accrue on top of these conservative trailing earnings multiples for the power transmission business.
Standard risks exist, such as delays in getting approval for the demerger and deterioration in ex-power transmission businesses in the meantime.
The sugar and ethanol businesses remain hostage to government policy on MSP revisions and blending mandates; without support, margins stay thin.
There’s no guarantee TPTL will immediately command premium valuations at listing. If markets are weak or investor appetite for mid-cap engineering stocks is low, the re-rating could take time.
The debt split between the two entities matters too, though the power transmission business’s capital-light nature should shield it from a heavy burden.
Lastly, execution matters. The power transmission business’s growth story depends on ramping up capacity on time, winning defence orders, and making international expansion work.
Triveni’s demerger is more than an internal reshuffle – it is a conscious shift toward a sharper strategic identity. The company is effectively acknowledging that its high-margin power transmission business and its regulated, cyclical sugar-ethanol-water portfolio are running on fundamentally different tracks.
While sum-of-the-parts arithmetic suggests marginal value unlocking, the real story hinges on the power turbine business’s execution and the valuation multiple TPTL can command. This is not a textbook mispriced deep-value opportunity; it is a transition story, one that offers optionality to investors who are willing to stay patient and trust that the management will deliver.
The demerger is rational. Whether it turns out to be rewarding is something only time and the market will reveal.
Note: We have relied on data from http://www.Screener.in and http://www.tijorifinance.com throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
Rahul Rao has helped conduct financial literacy programmes for over 1,50,000 investors and worked at an AIF, focusing on small and mid-cap opportunities.
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