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Prabhudas Lilladher Report
We revise our FY25/FY26E earnings per share by +4.4%/+3.6% factoring in strong traction in Green Solutions. Thermax Ltd. reported 19.6% YoY revenue growth with Ebitda margin rising 123 bps YoY to 9.9%. Although large orders were soft, order enquiries remain robust across steel, chemical, food and beverage and biofuel.
Meanwhile, international order pipeline has improved this year against previous years. Water business continues to see growth opportunities in desalination, effluent water treatment etc.
In Chemicals segment, Thermax is expanding into new customer segments while continuing to add new capabilities. Bio-CNG faced certain technical setbacks in rice straw feedstock based projects which might take a few quarters to resolve.
We believe Thermax is well placed to gain from increasing thrust on energy transition and de-carbonisation initiatives led by its-
sustainable green industrial solutions in bio-energy, heating and cooling, chemicals, and water,
technical expertise, and
strong balance sheet and prudent working capital management.
We roll forward to FY26 and re-assign ‘Reduce' rating with a revised SoTP derived target price of Rs 3923 (Rs 3017 earlier), valuing the core business (ex. Green Solutions) at a price/earning of 50 times FY26E.
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