Markets
BSE See NSE See 39,046.34
85.55 (0.22%)
collapse Related Readings collapse

Thermax - Big leaps ahead

By Prasanna Bidkar | 6/20/2011 4:43 PM Monday

The Indian equity market seems to have entered a very dull and tepid phase. The reason is quite simple i.e. the expected slowdown in the GDP growth and its likely impact on India Inc. However, in such a scenario too there are certain companies which are expected to put up a better show. One such company is Thermax. It has posted better than expected results for Q4FY11 and FY11 as a whole. While most on the street were expecting slower order inflows and a pressure on the margins to impact the results negatively, the company actually surprised them by going the other way.

The order inflow has remained strong with the current order backlog valued at Rs 6,450 cr. This is almost 1.50 times of its FY11 revenues and is to be executed in the next 18 months. The best part is that the order book is quite diversified with metals contributing 20%, refinery 18%, cement 18%, power 12%, sugar 8%, captive power 8% and the rest spread over other projects. It clearly indicates that the company is not dependent on any one particular sector. Going ahead the company expects the order flows to remain healthy with a major order expected in the next quarter.

This order would be to the tune of Rs 1,450 cr in Q1 or Q2 of FY12. According to the management, a sustained momentum in the steel and paper sectors is what will keep its order book on the healthy side. Secondly, there is no expectation of a slowdown in orders from captive power plants despite issues with respect to coal linkage availability. Also, a revival in demand from the Middle East and South-East Asian markets is what will help a good flow of orders going forward.

Last year Thermax acquired the European boiler manufacturer Danstoker A/S and its German subsidiary, Omnical Kessel. This acquisition seems to be a strategic fit for the company’s heating business and is the first step towards its agenda of growth in global markets by expanding its environment solution portfolio. Along with this, Thermax Babcock & Wilcox Energy Solutions, the joint venture company formed for manufacturing super-critical boilers, commenced work on its plant facility in Shirwal (Satara, Maharashtra). Planned at an investment of Rs 825 cr, the facility is expected to be completed by September 2012 and it will be India’s third manufacturing facility for super-critical boilers.

On the financial front, despite margin pressures FY11 has been a good year. On a consolidated basis the company posted topline of Rs 5,337 cr as against Rs 3,370 cr in FY10. With minimal impact on EBITDA margins which declined to 11.60% in FY11 from 11.80% in FY10, the bottomline at Rs 382 cr was better than Rs 318 cr (after adding back the extraordinary expense of Rs 174 cr for the settlement of a business dispute). On the valuation front the scrip is available at 18x (EPS Rs 32.09) of its FY11 earnings. With the management expecting around 15-20% growth in the earnings for FY12 our recommendation to investors is to buy the scrip at its current levels with a target price of Rs 700.

 

Find More Articles on: Research, Fundamental Picks, DSIJ Magazine, Choice Scrip

news letter

More for the early bird.

Get the post-market reports and breakfast news right in your inbox. See latest »

DSIJ Mindshare

MIDHANI and HAL partner to develop bio implants

Geyatee Deshpande / Article rating: 5.0

Mishra Dhatu Nigam Limited (MIDHANI) signs an MoU with Hindustan Antibiotics Limited (HAL). This MoU will provide synergy for quality manufacturing of MIDHANI’s Bio-medical Implants and get access to the pan-India distribution of HAL. This partnership is aimed to gain advantage from the strengths of both the companies and benefit users of Bio-medical products in India.

12345678910Last

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Tiger Logistics topline to grow by 10%--buoyant over infra sector status to logistics sector

Logistics sector will play a vital role in making the concept of ‘Make in India’ a success. This will be further aided by some of the recent steps taken by Government of India such as granting of infra sector status to logistics sector.

Best and worst Performing Sector Funds of Year 2017

Best and worst Performing Sector Funds of Year 2017

As the year-end has approached most of you are eager to know the mutual fund movers and shakers of the year 2017. Read on to find the performance of various sector dedicated funds.

Markets may start positive, but volatility likely due to F&O expiry

Markets may start positive, but volatility likely due to F&O expiry

The start of the F&O expiry day is likely to be in the green, but volatility may creep in with the progress of the session. The SGX Nifty suggests that the Nifty could open at 10,525 with gains of 32 points at the opening bell. 

Pidilite announces buyback of Rs 500 crore

Pidilite announces buyback of Rs 500 crore

The buyback offer comprises purchase of up to 50,00,000 equity shares. The buyback offer size comprises 0.975 per cent of the total paid-up equity capital of the company.

Bank Nifty drags markets to close in the red

Bank Nifty drags markets to close in the red

The late session fall in Bank Nifty changed the direction of the market, leading to a marginal fall in the benchmark indices. Bank Nifty yet again resisted at its multiple point downward sloping trendline level at 25733.

Six major underperforming MF schemes having higher expense ratios

Six major underperforming MF schemes having higher expense ratios

Mutual funds with a large size of assets under management (AUMs) are supposed to have lower expense ratios. However, there are schemes with large AUMs but having higher expense ratios and generating lower returns. 

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma supports market; Sun Pharma at bullish reversal

Nifty Pharma index has come in as the healer in an otherwise sluggish market. Index has given a consolidation breakout at the 9420 level today and if the it sustains 9420, followed by 9628 on the upside, it has a long way to go.

Ten stocks close to their 52-week low

Ten stocks close to their 52-week low

Following stocks are close to their 52-week low as at 12.35 p.m. on December 27.

Ten stocks close to their 52-week high

Ten stocks close to their 52-week high

The markets on December 27 opened gap down. BSE Sensex is trading at 34,068.15, up by 57.54 points and the Nifty is trading at 10,539.45, up by 7.95 points.

Five stocks with selling interest

Five stocks with selling interest

Overall volumes in futures & options currently stand at 62.75 lakh contracts with a turnover of Rs. 5,19,204.72 crore.