The Hindu Business Line : Thermax rules firm on strong order book

POWERED by a strong order book and a robust growth in the domestic and international business front, the stock of Thermax has been ruling firm on the bourses.

Market sources said that the Electricity Act 2003 has opened new areas of growth in captive power generation, the key focus area in the domestic market of the company for its boilers and heaters product range.

According to analyst Mr Bhavin Vithlani of P-Sec, the enactment of the Electricity Act has resulted in two turnkey orders for captive power plant worth Rs 180 crore, which is expected to drive FY05 and FY06 sales.

"These two orders will ensure that Cogen segment which was subdued, is right back on track and indicates growth visibility during FY05-06. The company has also indicated that it is in talks with a couple of players in the Cogen division," he added.

Thermax is a leading player in the power generation equipment space. It focuses on manufacturing medium to low capacity boilers and heaters. Brokers maintain that the company's strong fundamentals are likely to see investor interest sustained in the stock.

According to a Kotak Securities report, recent orders booked are of high margins. As such continued growth in the sales price along with relatively limited appreciation in raw material prices will see margins in FY05 look up. "FY05 will be an inflection year, wherein the increase in sales price and high operating leverage would result in bettor profitability," adds the report.

The stock ended the day at Rs 405 with around 4,544 shares traded on the NSE. On the BSE, it ended at Rs 408, up 2.93 per cent, with around 1,970 shares traded.