THERMAX
Reco price: Rs 525
Current market price: Rs 554.65
Target price: Rs 657
Upside: 18.5%
Brokerage: Edelweiss
Thermax has secured a contract for turnkey supply of 270 MW (2x 135 MW) power plant valued at Rs 1,000 crore. The company had secured orders worth Rs 1,000 crore in Q1 FY10. Further, it announced order wins of Rs 410 crore in the previous fortnight.The FY10 order intake estimates have been revised to Rs 3,770 crore, implying additional order inflow of Rs 1,370 crore in the balance of FY10. With order intake upgrades, FY11 and FY12 sales and net profit estimates are also upgraded. For FY11, EPS estimates stands at Rs 31.6 and for FY12, it is Rs 38.4.
The scale up in the utility business can change Thermax’s business model over the long term from a corporate capex player to a diversified power generation equipment and corporate capex play.
The brokerage upgraded the target price to Rs 657 to factor higher growth in cash flows driven by increase in order inflow. At Rs 657, the stock trades at 20.8x, its FY11E EPS. Maintain buy. Current market prices as on September 18
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