Thermax : a stock that could rekindle your portfolio

Markets after taking a breather post RBI policy announcement are looking for fresh cues. FIIs have been net buyers whereas DIIs have been net sellers in the markets this week so far. Assuming no negative surprise in the market in short term, Thermax is one stock that can be part of a short term as well as long term portfolio.

Thermax is a leading Indian energy and environment solutions provider and provides a range of solutions in the areas of power, chemicals, air pollution control, heating, cooling, water and waste management.

In FY16 Thermax has atleast 32 per cent of its business coming from overseas markets and atleast 68 per cent of its business coming from domestic markets.Thermax commands a market share of 80-85 per cent in chillers, 60 per cent in air treatment, approximately 30-35 per cent in boilers and heaters and 35 per cent in chemicals in India.

The stock has an interesting story as the rising demand for energy products and the increasing viability of alternative energy presents a long term opportunity for Thermax in the energy solutions business. The environmental regulations are favourable for Thermax’s environment business. A strong balance sheet with an expected RoE of approximately 13 per cent and RoCE of 18 per cent augurs well for the stock fundamentally. Yes securities have a buy rating on the stock with a target price of Rs 995 per share with a time frame of 3 to 4 months. 

The stock shut shop on Wednesday at Rs 910 on BSE. The stock has generated 6.36 per cent over 1 year. The 52 week high for the stock is Rs 972 per share.