The Hindu Business Line : Value buying pushes up Tata Honeywell

The August 19 agreement between THL and the US-based Gensym Corporation for systems integration appeared to have enthused some investors, according to analysts. Under the agreement, THL will sell, implement and support automation solutions based on Gensym's products to the process and manufacturing industries within the Indian subcontinent.

THL is a 40:41 joint venture between the Tata Group and the $25-billion Honeywell, the world leader in process control solutions.

THL is a leading provider of integrated automation and software solutions in hydro carbon processing, oil and gas, metals, minerals, pharmaceuticals, power, pulp and paper industries.

According to analysts, all these industries have posted higher growth rate and the prospects for THL's topline and bottomline growth have improved significantly in the last one year.

The solutions and services from Tata Honeywell span the complete gamut from level one to four, covering field instrumentation, control layer, advanced process control, manufacturing execution systems, supply-chain planning, management solutions, and integration with financial systems, such as ERP.

The security solutions for homes and business contribute two per cent to the total revenues currently. Exports, which accounted for 20 per cent of the THL turnover, have grown by around 50 per cent.

THL has an order book of Rs 430 crore as on March 2004 compared to Rs 30 crore as on March 2003. It added orders worth Rs 90 crore in the first two months of the current quarter, Mr Devarsh Vakil of Anagram Stockbroking said.

THL announced that it has won big orders from Hindustan Zinc, Gujarat Ambuja, Indal, HEG, Balco and Tata Steel for automation of their captive power plants. In March, it announced an IOC assignment for integrated security solution.

At Monday's closing price, the stock traded at 13 times its FY04 earnings of Rs 29 per share.