Thermax Q1 Results Review - Green Energy, Chemicals To Drive Growth: Yes Securities

Yes Securities Report

Thermax Ltd. reported a largely in-line set of numbers with a healthy 17% YoY revenue growth at Rs 19.3 billion led by growth across segments such as industrial products (up 26% YoY), industrial Infra (up 13% YoY), green solutions (up 94% YoY) and chemicals (up 7% YoY).

Order inflows came in at Rs 25.7 billion (up 11% YoY) while the order book as of Q1 FY24 stands at Rs 105 billion (1.3 times trailing twelve months revenues), providing revenue visibility for one-two years.

Ebitda margins expanded by ~100 bps YoY owing to easing raw material pressures. Though the ordering pipeline for large projects has plateaued, management sees decent traction in green energy, water treatment, ZLD, waste to energy, biomass, waste heat recovery, clean air solutions, etc. both in India and globally.

We believe Thermax is well placed to capitalise on revival of economic activities in the long run given its-

1. strong balance sheet,

2. prudent working capital management, and

3. recent technological tie-ups.

The stock is currently trading at 49.8 times/39.5 times FY24E/25E. With the recent run-up in the stock price, we downgrade it to 'Neutral' ('Add' previously) with a revised target price of Rs 2,633 valuing the company at 40 times FY25E EPS.

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