Wednesday, January 07, 2009

Thermax CMP 203

Div Yield 3.94% Book Value Rs 62 (FV Rs 2) EPS Rs 23.56

Thermax Limited, the Rs. 3246 crore leader in energy and environment solutions; is one of the few companies in the world that offer 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 water sources. Thermax products and systems are in use in over 40 countries over the world, supported through a network of subsidiaries, manufacturing facilites and Sales and Service offices in 14 countries.

Thermax has shown consistent improvement in its fundamentals over the years. Its Sales and Profits have risen by 24.5% CAGR in the last 9 years. Order backlog as on September 30, 2008 was substantially higher than last year at Rs. 4071 crore (Rs. 2927 crore). The group order backlog was Rs. 4253 crore (Rs. 3234 crore).

New manufacturing facility at Baroda is well on track. Management indicates that it will break even by FY10 and will contribute to almost half of company's revenues by FY11.

The stock looks undervalued at current levels with market cap of around Rs 2400 Cr when FY08 total sales have been Rs 3157 Cr. A more comfortable thing is that it is a debt-free company.

Thermax financials at a glance

Technical Evaluation:-

Thermax is trading above its short-term moving averages and looks ready for moving up. Buy Rs 195-200 SL 185 Target 235-240 in a month’s time.