The Hindu Business Line : Strong order book propels Walchandnagar

THE stock of engineering company Walchandnagar Industries surged on the bourses backed by sustained buying support. The stock, which had touched Rs 65 levels on Feb 3, has since then appreciated by almost 43 per cent to its current levels of Rs 93.

Brokers said a strong order book position and a positive outlook on the company have rejuvenated interest in the counter.

The company is into supplying boilers to core industries, making sugar machinery, into defence related work, also supplies to nuclear projects and participates in space related work. It registered net sales of around Rs 150 crore for the year ending September 03.

Sources maintain that almost 50 per cent of the revenue was from boiler sales. It has an EPS of around Rs 11.

According to analysts, the company is relatively debt-free and has cash on books of around Rs 85 per share. "It has a strong order book of around Rs 348 crore. It also has investments in stocks which can be encashed anytime," an analyst said.

Sources maintain that the company is expected to see a revenue growth of around 25 per cent y-o-y and as much as a 50-60 per cent jump in profits. When contacted Mr J.L. Deshmukh, Chief Operating Officer, Walchandnagar Industries, confirmed that the company has a good order flow. "While we have not seen recovery in the sugar business due to excess capacity, there is good growth potential in the cement, mineral processing, co-generation and the boiler segments. We also undertake special projects for the defence and are into nuclear and space equipment, which also are growth segments," he told Business Line.

On the Rs 348-crore order book, the COO said the orders were to be executed over a period of time. "There is no denying that demand and potential exist in the market place. And the revenue growth will be dictated by these forces of demand and supply," Mr Deshmukh said.

The company competes with L&T in the defence and mineral processing segment, with Thermax in the boiler and co-generation segments and with other small players in the sugar segment.

While it has a strong domestic presence, the company is also looking to boost its exports in the long term. "In order to achieve a balance, we will be concentrating on exports," Mr Deshmukh said. The company currently exports to SE Asian countries and parts of Europe.

The stock ended the day at Rs 93.60, up 6.06 per cent on the NSE with 11,254 shares traded. On the BSE, it closed at Rs 92.7 with 13,562 shares traded.

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