Brokerages remain positive on Thermax Ltd. despite cutting their target prices, citing expectations of a second-half revenue recovery, improved execution, and higher-margin international shipments. JPMorgan upgraded the stock to Overweight from Neutral, while Kotak Institutional Equities and UBS maintained their Buy ratings. However, all three brokerages lowered their target prices and earnings estimates, flagging concerns over margin execution, weak order inflows, and legacy project-related challenges.
Thermax Q2 Results: Key Highlights (Cons, YoY)
- Revenue from operations increased 11.4% YoY to Rs 2,756 crore from Rs 2,474 crore.
- Ebitda rose 13.5% to Rs 194 crore from Rs 171 crore.
- Ebitda margin improved 10 basis points to 7% from 6.9%.
- Net profit declined 4.6% to Rs 115 crore from Rs 120 crore.
What Brokerages Say
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JPMorgan
- Upgraded to Overweight from Neutral, while cutting its target price to Rs 3,491 from Rs 4,139.
- The Rs 142.5 billion order backlog and improving industrial demand support expectations of a recovery in execution.
- Management expects revenue of over Rs 70 billion in the second half of fiscal 2027, aided by higher-margin international shipments.
- The drag from legacy projects is expected to ease by the end of fiscal 2027.
- Cut fiscal 2027-28 earnings per share estimates by 16-27%.
Kotak Institutional Equities
- Maintained Buy, while cutting its target price to Rs 3,600 from Rs 4,000.
- A second-half revenue recovery and deferred high-margin exports are expected to support profitability.
- Data-centre orders and emerging industrial businesses provide medium-term growth opportunities.
- Cut fiscal 2027 EPS estimates by 11%, as margin execution remains a concern.
UBS
- Maintained Buy, while reducing its target price to Rs 4,400 from Rs 5,100.
- Management is targeting second-half revenue of over Rs 70 billion and Industrial Products margins of 9-10% in fiscal 2027.
- The Rs 142 billion order book provides execution visibility, while deferred exports are expected to aid recovery.
- Cut fiscal 2027-29 EPS estimates by 19%, 10%, and 6%, respectively, amid weak orders and margin execution risks.
Also Read: Thermax Shares Sink 17%, Near 52-Week Low After Q2 Profit Misses Estimates 26%, JM Says 'Sell'
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