Praxair Inc’s (PX) Indian unit, Praxair India Private Limited contracted to supply 600 tons of high pressure nitrogen daily to Tata Steel Limited. The gas supplied will be used primarily for steel production by the Indian steel maker.
The contract enhances Praxair’s long-term bonding with Tata Steel, as the company has been supplying gaseous oxygen, nitrogen and argon to Tata Steel’s Jamshedpur facility since 2005. The company has three air separation units set with a total capacity of 2,625 tons per day.
Praxair is one of the leading industrial gas producers operating primarily in North America, South America, Europe and Asia. We believe Praxair has significant growth opportunities in diverse markets and its concerted effort in increasing exposure and tapping opportunities in emerging markets is also very encouraging.
The company’s Indian operations include large contracts with important companies like JSW Steel, SAIL, Saint-Gobain Glass, Haldia Petrochemicals and Hospet Steel. In addition, Vacuum pressure swing adsorption (VPSA) plants have been constructed for companies like Jindal Steel Power Limited, Usha Martin and others.
Currently, the company is engaged in building a large facility for Indian Oil Corporation at Paradip, Orissa, for supplying gaseous hydrogen and nitrogen.
We believe the growth prospects of industrial gas producers are very bright going forward, with ever-rising demand for gases due to their wide application areas. Industrial gases are being increasingly used by the chemical processing and petroleum refining, metal production and fabricating, and electronics and health care industries.
As the economy revives from the recent global crisis, requirement for industrial gases is expected to grow. Moreover, the company has an extensive pipeline of projects with backlog expected to be on the rise.
We believe Praxair is well positioned to deliver another good quarter of results, beating estimates, as is evident from its positive average earnings surprise. Expecting the company to outperform the market, we maintain an Outperform recommendation on the stock.
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