Buy Thermax; target of Rs 556: Firstcall Research

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Buy Thermax; target of Rs 556: Firstcall Research

Firstcall Research is bullish on Thermax and has recommended buy rating on the stock with a target of Rs 556 in its November 03, 2011 research report.

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Firstcall Research is bullish on Thermax and has recommended buy rating on the stock with a target of Rs 556 in its November 03, 2011 research report.

"Incorporated in 1980, Thermax offers engineering solutions to various industries. Thermax Limited , a Rs. 3300 crore energy and environment solutions provider, is one of the few companies in the World that offers integrated, innovative solutions in the areas of heating cooling, power, water and waste management, air pollution control and chemicals. The sustainable solutions that Thermax develops for client companies are environment-friendly and enable efficient deployment of energy and waste resources. Thermax has a well established technology research and development facility. The company has 120 patents, 82 national and 16 international trademarks to its credit. Over the years, Thernax has had technology partnerships and alliances with at over 40 global organizations."

"Thermax Ltd disclosed results for the quarter ended Sep 2011. Net sales for the quarter moved up 19% to Rs.13034.79 million as compared to Rs.10916.21 million during the corresponding quarter last year. Total Income has increased from Rs 11049.50 million for the quarter ended Sep 30, 2010 to Rs 13242.74 million for the quarter ended Sep 30, 2011. During the quarter, the company has reported Net Profit increased to Rs.1016.88 million from Rs.895.26 million in previous year same quarter. The Basic EPS of the company stood at Rs.8.53 for the quarter ended Sep 2011."

"Net profit of the company has increased at 170% yoy Rs.3824.18mn from Rs.1414.38mn of same period of last year. Total revenue for the year stood at Rs.48832.34 mn from Rs.31854.69 which is 53% increased than that of a year ago. EPS for the year stood at Rs.32.09 per equity share of Rs.2.00 each. Operating profit of the company stood at Rs.6183.45mn. OPM for the year stood at 12.66%. Expenditure of the company increased 54% YoY to Rs.43171.47 mn. Interest expenses for the year stood at Rs.21.84mn."

"At the current market price of Rs 492, the stock is trading at 12.90 x FY12E and 11.42 x FY13E respectively. Price to Book Value of the stock is expected to be at 3.36 x and 2.59 x respectively for FY12E and FY13E. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.38.15 and Rs.43.09 respectively. The Company has bagged Rs 4.03 billion order from India`s largest producer of viscose staple fibre to construct and commission a turnkey captive power plant in western India. The Company has partnered with US-based Amonix to bring proven, CPV technology for clean power generation to India. Net Sales and PAT of the company are expected to grow at a CAGR of 30% and 26% over 2010 to 2013E respectively."

"Thermax has entered into technology transfer license agreement with German engineering company. During the quarter, the company has reported Net Profit increased to Rs.1016.88 million from Rs.895.26 million in previous year same quarter. On the basis of EV/EBITDA, the stock trades at 8.07 x for FY12E and 7.17 x for FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend 'BUY' in this particular scrip with a target price of Rs 556 for medium to long term investment," says Firstcall Research report.

Shares held by Mutual Funds/UTI

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To read the full report click on the attachment