Reco Price: Rs 615
BSE Code: 500411
BSE Volume: 11942
Date: 29/11/2011

We had recommended Thermax to our investors in Issue No. 14 dated June 20-July 3, 2011, when the scrip was trading at Rs 615. Our recommendation was backed by factors like a strong order inflow and an order backlog. The best part was that the order book was quite diversified. The company is quite confident about order inflows, and is expecting a major order worth Rs 1450 cr in Q2 FY12. The order flow was not as per the expectations, though. The consolidated order book now stands at Rs 6530 cr, as the order inflows in Q2  FY12 worked out to be lower at Rs 1280 cr. While the order book is now down by 10%, the order inflow is also down by 9% on a YoY basis. However, we recommend a hold on the counter, as the order book is still diversified.


The major sectors that have contributed to its order inflows are refineries with 30%, fertilisers with 12%, cement with 6%, power with 8%, textiles with 7%, and the rest through the mining, water and other segments. Its Chinese subsidiary has been performing well, and is expected to break even during the next fiscal. The financial performance of the company has also been good, and for H1 FY12, it posted a topline of Rs 2733 cr and a bottomline of Rs 194.30 cr, as against Rs 2000 cr and Rs 158.20 cr respectively in H1 FY11. Thus, considering the good order book, enhanced execution capability and an expected improvement in the overall economy, we recommend a ‘hold’ on the counter.