Thermax Ltd. share price target

Thermax Ltd Q2FY18 results comment Revenue grew by 18.5% to Rs. 1033.1 Cr in Q2FY18 when compared to the previous quarter. On the other hand, it fell by 3.47% when compared with Q2FY17.

Order inflows were higher than expectations. At Rs13bn, up 14% YoY, they were led by textiles, chemicals, food and refinery. In domestic markets, they have improved 20% annually. With ASEAN operations on, the orders could be higher in the future. Revenues were marred by GST implementation. Margins in chemical segment were healthy because of product mix; resins 55%; while specialty occupying remaining...

Order Booking Sustained; Revenue & Profits Down in H1FY18: Order inflows were steady from both international and domestic markets, from sectors like Cement, Refinery, Textiles and Food & Beverages. Consolidated order booking for the quarter reached Rs.13,970mn which is higher by 13.6% on YoY basis breaking into domestic flows of Rs.6920mn and export flows of Rs.7050mn during Q2FY18.

Hence, we upgrade TMX to NEUTRAL, with TP of Rs 969/sh (30x Sept-19 earnings). TMXs 2Q consol. sales fell 6% YoY and rose 19% QoQ to Rs 10.3bn, impacted by a 10/4% YoY fall in energy/environ revenues to Rs 7.9/1.5bn. Chemical revenues rose 27% YoY to Rs 1.1bn. EBITDAM rose 82/94bps YoY/QoQ to 9.2%, a result of tight cost control measures. Net profit fell 28% YoY to Rs 568mn, a result of lower other income (down 35% YoY to Rs 236mn) and higher tax rate at 39% vs 33.1% YoY.

issues. However, TMX was able to recover INR1b of sales in 2QFY18. Gross margin shrunk 100bp YoY to 43.7%. EBITDA grew 11% YoY to INR0.9b (est. of INR0.8b), and the operating margin improved 90bp YoY to 10.0% (est. of 8.7%), led by a reduction in other expenses (-290bp YoY to 20.6%). Adj. net profit declined 5% YoY to INR0.6b (est. of INR0.62b), impacted by lower other income, higher interest expense and a higher tax rate. Weak performance at subsidiaries: Subsidiaries' revenue was down 25% YoY to INR1.6b, EBIDTA was down 67% YoY to INR56m, and breakeven at...

ICICI Securities Ltd | Retail Equity Research Thermax reported a mixed Q2FY18. Revenues were lower than estimates while EBIDTA margins were ahead of our estimates. For the second quarter in a row the company reported growth in order backlog coupled with growth in order intake Revenues came in at | 863.9 crore, down 0.8% (I-direct estimate: | 912 crore). Order inflows were in line with estimates at | 1185 crore, up 8% YoY. The key positive was the consecutive growth in...

Q1FY18 order inflow at Rs 19.2 bn (up 135% YoY) was above expectations. Even excluding the large export order of ~Rs 10 bn from a leading African conglomerate (Dangote), the order inflow was up 12% YoY.

Strong Order Booking and Order Backlog in Q1FY18: Thermax consolidated order booking grew by 134.9% on YoY basis to Rs.19,190mn with Energy orders of Rs.17,260mn, Environment orders of Rs.1010mn and Chemical orders of Rs.920mn in Q1FY18.

Thermax reported a disappointing Q1FY18 on GST implementation issues from the client side. Revenues and margins were lower than expectations, which consequently impacted PAT. The key silver...

Granted, higher exposure to international orders poses a risk. From margins to pace of execution, there are multiple variables that could adversely impact. We have moderated our EBITDA FY19 expectations by 9% and we are factoring in lower dividend income. We have reduced the TP to Rs878 (from earlier TP of Rs906). With 16% fall in prices from our last note, we upgrade our recommendation to HOLD. Key Highlights and Investment Rationale The tide, perhaps, is changing: Moving from orders, TMX narratives are shifting to competitive margins. Granted, TMX will be beneficiary from compact linear Fresnel...