Barclays maintains underweight on Thermax post Q4

MUMBAI: Barclays has maintained its underweight rating on Thermax after the company's order inflows in the quarter fell below estimates.

"Order inflow growth for Thermax is expected to remain challenging, given the weak industrial capex cycle and muted ordering/stiff competition in the power sector," said Barclays analysts led by Venugopal Garre, in a note to clients.

Thermax shares rose 1.3% to Rs 425.65 on Monday. Barclays maintained its price target for the stock at Rs384.

"With order book to trailing four quarter sales now below 1x, there will be renewed concerns on the ability to drive inflows, in an environment of weak ordering in the power sector and stiff competition for the few orders under bid," Barclays analysts said.

Barclays said order inflows in the quarter were at Rs 900 crore as against expectations of Rs1500 crore.

"While we do not anticipate a recovery in the power/industrial cycle in FY13, we acknowledge that a low base of orders for Thermax ensures that a single large order win can swing visibility suddenly and further a strong balance sheet/core industrial boiler business may protect downside beyond a certain valuation range," the analysts said.