Thermax Ltd. share price target

Thermax 1QFY17 result was a miss on both revenue and EBITDA leading to a PAT decline of 19% YoY for the quarter. Revenue (Rs8.1 bn, -17% YoY) declined on the back of weak order book.

Results below estimates: Thermax’s (TMX) 1QFY17 operating performance was below our expectations. Sales declined 20% YoY to INR8.1b (our estimate: INR9.3b), EBITDA fell 19% YoY to INR637m (our estimate: INR937m), EBITDA margin remained stable YoY at 7.8% (our estimate: 10.0%) and net profit was down 19% YoY to INR452m (our estimate: INR627m). Consolidated revenue declined 19% YoY to INR10.0b, while net profit (post minority interest) was down 10% YoY to INR490m. Motilal Oswal also cut their rating from Neutral to Sell with a revised target price of INR730 (25x FY18E EPS of INR29, based on last 10 years’ average P/E multiple), given the weak business outlook and rich valuations.

Thermax reported disappointing Q1FY17 results on all counts. This was on the back of lower carry of order backlog from FY16, which led to execution decline thereby impacting margins and profitability. Order inflows for Q1FY17 were below expectations as well • Revenues declined 18.6% YoY to | 815 crore vs. our estimate of | 881.9 crore. The disappointment stems from the lower carry of order backlog from FY16. On a consolidated basis, revenues declined 18.6% YoY to | 1002 crore . Order inflows continue to disappoint as they declined 20.4% YoY to | 698 crore whereas order backlog witnessed 14.5% YoY decline at | 3653 crore. However, the company is witnessing some pick-up in domestic enquiry for orders in industry like food processing, beverages, pharma, paints and textile industry. ICICI Securities Limited value the stock on an SOTP basis and assign a target price of | 814 with a HOLD recommendation.

And the disappointment continues. With a poor backlog, TMX IN starts FY17 on a bad note. As usual, the core policy-dependent sectors are yet to translate. Adding to the woes, even the outlook is bleak. True, non-policy dependent orders like, for instance, FMCG and waste heat recovery in cement, might save the day. However, they hardly change the direction of dial. Expansion plans are on cards. It is unclear if they can be up and running in full steam to justify the stretched valuations. With bleak order inflows, thereby, we fear the days are darker ahead. We continue with a SELL rating on the stock....

Thermaxs 3QFY16 results missed estimates on revenue and EBITDA, leading to a PAT decline of 11% YoY (14% below our estimates) at Rs 679mn. While revenue (Rs 10.4bn, -8% YoY) was 6% below expectation, EBITDA (9.5%) was a miss of 50bps.

in key domestic end markets. Revenue in the energy/environment segments fell 9%/13% yoy. EBITDA was almost 7% below our estimate margins in energy were down 10.3% ( 120bps yoy), but up marginally for the environment segment at 7.7% (+40bps yoy). The...

Karvy downgrades Thermax to HOLD from earlier BUY with a revised price target of Rs.896. We are scaling down our FY16E and FY17E on account of weak order inflows and shrinking revenue visibility necessitates for downward revision of estimates by 6.6%/12.2% leading to Revenue, EBITDA and PAT to Rs.52,651mn/4,540mn/2,681mn and Rs.55,641mn/4,820mn/2,875mn for FY16E nd FY17E leaving book-to-bill ratio below 1x during FY16E-17E. We value Thermax at 36xFY17E EPS (+1 SD of FY05-15 mean P/E) and by adding 1.5x book value of investments in JV transpiring to a target rice of Rs.896 with an upside potential of 5%.