In an interview to CNBC-TV18, on the sidelines of HSBC summit, Unnikrishnan said the capital utilisation has not reached at reinvestment level in India yet. Though there has been some traction in small-ticket industries like food processing, large-ticket investments will take time to draw corporate interest, he feels.
Thermax's current order book stands at over Rs 5,000 crore and the company expects it to improve marginally by the end of Q2.
It has been seeing a build-up in order inflows from South East Asia and expects to grow faster in those markets along with in West Asia and Africa. The company is also open to technology tie-ups in international markets, Unnikrishnan said.
Below is the transcript of MS Unnikrishnan's interview with Anuj Singhal and Ekta Batra on CNBC-TV18.
Anuj: In terms of business outlook, have you seen any change on ground since the new government has taken over and if yes do you think that is something that would reflect in the results of company maybe over the next two quarters or so?
A: Other than the sentiment reversal where negativity is absent and positivism is prevailing, at the ground level action wise we are yet to be seeing traction. Expecting that in the next two or three quarters things would be changing for the entire economic spectrum is a little too unfair to ask because 100 days or maybe a quarter, two quarters is insufficient to turnaround.
However, I want to be positive and give full credit to the new government that there is nothing which is come negative from their side. The way they have been able to manage the entire governance and also the policy spectrum is very positive which is making the entire industry and the decision makers think another time as to why did I not invest earlier.
However, the current situation is capacity utilisation within the country is not reached a level of reinvestment level that is the reason for you not seeing a ground level action. However, the small ticket size items in some of the conventional industries where in pharma, food processing I am seeing traction happening. However, the last ticket size investments sentiments alone are insufficient. You are talking about hard cash so it would take time for it to be reversed. However, the direction is positive.
Ekta: While the direction is positive, just to get a couple of numbers or maybe an outlook for Q2 FY15, in Q1 FY15 particularly the margins were impacted because of delays in terms of execution of few projects though the costs where booked in the quarter gone by. Is that the same case for Q2?
A: I won't give a guidance but certainly not the same. It will be any improved result that you should be expecting in the Q2 because one time expenses or which are not generic in nature will not continue; that is for the company.
Ekta: Could you give us a sense in terms of what your current order backlog is and how much of that would you be executing at this point?
A: We are still continuing at above Rs 5000 crore of order book with us and depending up on how the numbers are going to pan out for the current quarter which will be getting over in another 15 days, I would expect it to be slightly improved at the end of the quarter. Good parts of them are executable in current year but equal numbers are also getting transferred under the FY16 financial year.
Anuj: Last time you had told us that you want to increase your overseas presence. Are you working towards getting any incremental orders and if yes if you could tell us the geographies that you are working on?
A: On the product side of the company we have fairly good traction happening in the South East Asian markets. The projects which I mentioned earlier in the African and Middle Eastern continent there are enquiries under the stage of negotiations. So, depending upon how we are able to conclude them I should be able to declare the numbers as we progress. However, whatever we promised in terms of international traction, is online, is on the course.
Thermax stock price
On September 16, 2014, at 14:15 hrs Thermax was quoting at Rs 840.00, down Rs 4.35, or 0.52 percent. The 52-week high of the share was Rs 989.70 and the 52-week low was Rs 575.00.
The company's trailing 12-month (TTM) EPS was at Rs 20.49 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 41. The latest book value of the company is Rs 169.94 per share. At current value, the price-to-book value of the company is 4.94.
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