>THERMAX (KOTAK SECURITIES)

Eyeing power: Thermax is moving up the value chain with in-house capability of up to 300MW, and JV with B&W for super-critical and 300+ MW. We initiate coverage with ADD and target of Rs 725 (comprising Rs 650 for core business and Rs 75 for JV with B&W) based in (1) long-term upside from breadth of capabilities, (2) growth on the back of large backlog, (3) revival in industrial capex, and (4) cash flow and execution record. Slower- than - expected execution and valuation pose risks.

■ Profile: Leading player in energy and environment, moving up power equipment value chain

■ Capability expansion, execution pick-up and investment recovery to boost growth.

■ Financials: Strong growth expectation on back of strong backlog and capability scale-up

■ Recommend ADD with an SOTP-based target price of Rs 725/share.

To read the full report: THERMAX