Thermax
Cluster: Emerging Star
Recommendation: Buy
Price target: Rs700
Current market price: Rs610
Price target revised to Rs700
Result highlights
- Continuing its growth run, Thermax reported an increase of 101% year on year (yoy) in its consolidated sales to Rs713.6 crore during Q1FY2008.
- The operating profits jumped by 106.8% yoy to Rs76.5 crore. Increased raw material cost and higher proportion of lower margin project business restricted the operating profit margin (OPM) growth only to 30 basis points to 10.7% in Q1FY2008.
- The energy business recorded a robust growth of 101% yoy in revenues and bettered the profit before interest and tax (PBIT) margins by 70 basis points to 11.3%. Environment business also reported PBIT margins improvement by 130 basis points and contributing Rs119.2 crore to the top line.
- The consolidated net profit grew by a whopping 114.5% to Rs55.9 crore in Q1FY2008 much ahead of street expectations.
- In order to meet the rising demand company plans commissioning of two more manufacturing facilities in Salvi (Gujarat) and Zehjiang (China) which phase-wise will be fully operational between March-June 2008.
- The consolidated order book at the end of Q1FY2008 stood at Rs3,057 crore which is equivalent to 1.3x its FY2007 net revenues, which gives a clear visibility of earnings.
SECTOR UPDATE
Banking
RBI uncomfortable with IHC structures
The Reserve Bank of India (RBI) has expressed concerns over the intermediate holding company (IHC) structures planned by Indian banks. It has released a discussion paper with a view to review its suitability in the Indian context. RBI has kept the discussion panel open for the next three weeks. RBI's main concerns are regarding regulatory supervision, risk assessment and legal aspects involving the parent, IHC and other subsidiaries.
VIEWPOINT
HCL Infosystems
Technically sound
HCL Infosystems reported a tepid growth of 3.5% in its gross revenues to Rs11,855 crore for the fiscal ended June 2007. The growth was largely driven by a revenue growth of 13.9% in the computer systems segment to Rs2,614.5 crore. On the other hand, the revenues from the telecommunications & office automation (telecomm) segment remained flat at Rs9,049.5 crore largely due to the revision of agreement with Nokia.
Thermax, Banking, HCL Infosystems,