Thermax_AsitMehta_131110 by icestar


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									10th Nov, 2010.
                                               Thermax Ltd
Key Data                                   `   Thermax has acquired Danstoker A/S, a leading European boiler manufacturer and
CMP                                    875
                                               its German subsidiary, Omnical Kessel. The acquisition is valued at € 29.5 million
Target Price                           877
Bloomberg Code                      TMX IN     (approx `1,817 million).
Reuters Code                      THMX.BO
                                               About Danstoker
BSE Code                            500411
NSE Code                                           Danstoker, headquartered in Herning, Denmark manufactures biomass based
Face Value (INR)                           2       boilers and waste heat recovery systems for a wide range of industries. Its core
Market Cap (INR Bn)                    104         products are in the range of 200 to 100,000 kg of steam / hour and design
52 Week High (INR)                     926         pressures upto 86 bar. Its manufacturing facilities are located in both Denmark
52 Week Low (INR)                      465
                                                   and Germany, where it had acquired Omnical in 2003.
Avg. Daily Volume (6m)               74059
                                                   The company derives 34% of revenues from Germany, 25% from Denmark,
Shareholding                            %          14% from Sweden and rest from other European regions.
Promoters                             62.0
                                                   In terms of market share the company has 50% market share in Denmark and
Mutual Funds / Bank/ FI               15.2
Foreign Institutional Investors        9.1
                                                   20% in Germany. The heating industry in Europe is worth €370 million and
Others                                13.7         overall market share of Danstoker is about 10%. (According to the
Total                                100.0         management).

                                               Benefit to Thermax
                                                   The acquisition will enable Thermax get access to growing markets like
                                                   Europe and also technology and process know-how for the company’s heating
                                                   business. It will enable to enhance its product portfolio and extend it to new
                                                   untapped markets.

                                                   The heating business of Thermax is expected to be around `4.5 billion in FY11
                                                   which with the acquisition is likely to go upto `6.9 billion. The management
                                                   expects the size of this business to reach `10 billion in 2 years time.

                                                   The acquisition has been funded with a mix of debt and equity where the
                                                   company has raised debt worth €10 million (~`616 million) and balance is in
                                                   the form of internal accruals.


                                               The acquisition although will not have a material contribution in imminent term but
                                               from a long term perspective, it would add value as Thermax will get access to
                                               newer technologies as well as newer markets. It also has a huge opportunity to
                                               explore global markets for its existing domestic portfolio. We maintain our
                                               “HOLD” recommendation on the stock.

Deepti Chauhan
Tel: +91-22 2858 3408

Thermax Ltd. – Event Update       ACMIIL                                                                                         1

                                                             Institutional Sales:
                                                 Ravindra Nath, Tel: +91 22 2858 3400
                                                   Kirti Bagri, Tel: +91 22 2858 3731
                                                Himanshu Varia, Tel: +91 22 2858 3732

                                                            Institutional Dealing:

This document has been prepared by the Research Desk of Asit C Mehta Investment Interrmediates Ltd. and is meant for use of the recipient only and is not for
circulation. This document is not to be reported or copied or made available to others. It should not be considered as an offer to sell or a solicitation to buy any
security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as
such. We may from time to time have positions in and buy and sell securities referred to herein.

SEBI Regn No: BSE INB 010607233 (Cash); INF 010607233 (F&O), NSE INB 230607239 (Cash); INF 230607239 (F&O)

Thermax Ltd. – Event Update           ACMIIL                                                                                                                       2

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