Thermax Ltd. share price target

Thermax's consolidated net revenue reported a sharp decline of 36.2% y-o-y in revenue for Q4FY2020 (lower than our estimates) at Rs. 1,323 crore due to impact of lockdown (loss of revenue of Rs. 400 crore-500 crore), wherein the decline in revenue was seen across segments. Operating profit margin (OPM) declined by 343 bps y-o-y, led by lower absorption of fixed costs on lower revenue. Hence, operating profit fell sharply by 63% y-o-y to Rs. 64 crore. Further, lower other income (-41% y-o-y to Rs. 30.7 crore) and higher depreciation (+25% y-o-y to Rs. 30.8 crore) impacted PBT (-70% y-o-y) and adjusted PAT declined by 70% y-o-y...

We cut our FY21/FY22E EPS estimates by 28%/12% due to lower order 4QFY20 revenues declined 36% to INR13.2b and were 23% below our expectation. of overall revenue) declined 6% YoY to INR1.0b. Order inflow declined 18% YoY to INR9.5b for the quarter. Order book stood TMX is witnessing inquiries and order conversions in end markets like pharma, chemicals, refineries, food and food processing. PAT CAGR of 6%/15%/35% over FY20-22E, factoring in lower losses from Danstoker as well as the low base of FY20 as TMX saw disproportionate impact of COVID- Order inflow during the quarter was lower at INR9.5b (-18% YoY). Book to bill stood lower at Energy INR35.6b, Environment INR16b, There have been no order cancellations as yet. Order book in FY21 will be lower YoY as orders from Steel, Cement and Fertilizer sectors is expected to remain muted.

Companies like Larsen & Toubro and KEC with exposure to the Middle East and North Africa (MENA) region are expected to get impacted by the recent more than 60% fall in crude oil prices to US$22/barrel. This is expected to impact overall orders/awarding from the MENA region. Companies like Elgi Equipments, AIA Engineering, Thermax, Engineers India and Kalpataru Power with exposure to international geographies like Europe, Middle East, China for sales or essential raw material may get impacted. However, lockdowns in India, UK, Europe and other geographies due to Covid-19 are...

Supply chain disruption due to restriction on various movements. Around | 250-300 crore material ready for dispatches is lying at Mumbai, Chennai Port impacting Danghote order delivery. Also, this is impacting order execution. The supply chain breakage occurring since 50-60%...

TMX reported a de-growth in revenue by 1.8% YoY in Q3FY20 due to muted execution in energy & environment segment. While EBITDA margin improved by 56bps YoY to 8% due to drop in other operating expenses & better product mix....

Increase in order inflows (+9% YoY) was mainly on account of a large FGD order received from Jharkhand. Order book stood at INR54.4b (-16% YoY). EBITDA growth of 5.4% YoY to INR1.1b was in line with our est. while EBITDA margin PBT declined 6% YoY to INR1.1b (7% miss) due to higher depreciation and lower other income. Order inflow increased 9% YoY to INR16b (due to INR4.3b FGD order in Jharkhand). We roll forward our valuation on Sep21E EPS to arrive at TP of INR1,200 (unchanged target multiple of 30x) Order inflow during the quarter stood at INR16.1b (+9% YoY), led by a large FGD Order backlog stands at INR54.4b (-16% YoY), providing revenue visibility of 0.8x its TTM revenue, lowest in the last 11 quarters. Current order backlog stands at INR54.4b (-16% YoY), providing revenue visibility of 0.8x its TTM revenue, the lowest in the last 11 quarters.

For Q3FY20, consolidated order inflows were at | 1606 crore, up 9% YoY (considering the base effect of | 431 crore FGD order) owing to muted capex in several sectors impacted order inflows in the energy and environment segment. Consolidated order inflows comprise energy segment (| 799 crore), environment segment (| 162 crore ex-FGD) and chemicals segment (| 260 crore). Q3FY20 order inflows were dragged by decline in international inflows (| 266crore) while domestic order intake was up YoY (| 1266 crore). The consolidated order book was at | 5440 crore, down 16% YoY, a bit of a...

For Q2FY20, consolidated order inflows came in at | 1723 crore, up 28% YoY (considering the base effect of | 471 crore FGD order) owing to muted capex in several sectors impacted order inflows in energy and environment segment. Consolidated order inflows comprise energy segment (| 980 crore), environment segment (| 162 crore ex-FGD) and chemicals segment (| 109 crore). Q2FY20 order inflows were dragged by a decline in international inflows (| 374 crore) while domestic order intake was up YoY (| 1349 crore). The consolidated order book was at | 5334 crore, down...

PAT declined 62.3% to revenue/EBITDA/PBT increased 22%/28%/8% YoY, while Adj. PAT Energy segment grew 17% YoY to INR13.4b, supported by healthy execution. Environmental segment revenue declined 11% YoY to INR1.5b with EBIT margins at 4.7% (+190bp YoY). Chemical segment revenues came in at INR1.1b (+6% YoY) with EBIT margins at 17.9% (+290bp YoY). However, on account of strong execution depicted over the past six quarters, dependency on new order wins is even higher. TMX is focused on revenue growth, but wont do it at the cost of margins or at the risk of working Margin improvement in current market condition looks difficult, more so in the project business since competition is very aggressive. Over the past few quarters, Thermax has demonstrated its strong execution capability with robust revenue growth. Over the past few quarters, Thermax has demonstrated its strong execution capability with robust revenue growth.

Consolidated net revenue grew by 12% y-o-y led by a 17% y-o-y rise in execution in the energy segment while the environment segment revenue declined by 11% y-o-y. Chemical segment revenue growth remained muted. Operating profit margin (OPM) expanded by 41 bps y-o-y on account of lower employee costs. Hence, operating profit grew by 19% y-o-y to Rs. 130 crore. Further reversal of deferred tax assets worth Rs. 70 crore (opting for lower corporate tax rate) and lower other income dragged down net profit by 66%. Order inflows...