Thermax Ltd. share price target

TMX reported a robust Q1FY20 revenue growth of 35% YoY aided by strong execution in energy segment (45% YoY). While EBITDA margin improved by 42bps YoY to 7.1% due to drop in employee cost and other expenses . Improved operating margin and lower tax rate of 30% (vs 36% Q1FY19) increased earnings by 28% YoY. But order book de-grew by 18% YoY (OB to sales at 0.8x TTM...

Thermax Q1 earning came in higher than our estimates on account of better execution and deferred tax asset on account of TBW consolidation.

Thermax reported standalone revenue of | 1167.7 crore, registering robust growth of 37.5% YoY (on a proforma basis, including B&H; business), while consolidated revenue grew 34% to | 1392 crore YoY predominantly led by 45% growth in domestic and 9-10% growth in the international business. Proforma EBITDA came in at | 71.2 crore, up 21.4% YoY (vs. our estimate of | 68.9 crore) while the EBIDTA margin declined 80 bps owing to a morethan-expected increase in total operating expenses. PAT came in at | 49.9 crore, up 11.1% YoY. The consolidated order inflow for the quarter was at | 1217 crore (| 1652 crore in Q1FY19), down 26% YoY due to ongoing...

Energy segment performance supports margin improvement: Operating margin improved 40bp to 7.1%, supported by margin improvement in the energy segment. Margins in the Energy segment improved 90bp YoY to 6.0%. However, margins in the Environment and Chemical segment were under pressure. Environment margins slipped 100bp YoY to 2.1% and Chemical margins declined 50bp YoY to 11.7%. Order inflow declines sharply, but outlook for standard business stable: Order inflow declined 26% YoY to INR12.2b due to absence of large-ticket...

Thermax reported consolidated net revenue growth of 35% y-o-y due to a strong execution in its Energy division (up 45% y-o-y) which was above our estimates. Chemical and environment divisions remained muted. Despite strong execution, gross margins (down 418 bps) remained under pressure while OPM improved marginally (in line with expectation) led by lower employee and other expense (as a % of sales). Net Profit growth was supported by lower ETR despite higher interest, depreciation and lowers other income. Weak order intake over trailing two quarter...

Thermax Delivers Robust Q4: Thermax earnings was well above our and street estimates at Rs. 11.27. This wasprimarily driven by topline growth of 44% YoY to Rs. 20.7 Bn.

Strong order book, order inflows; key to revenue growth For Q4FY19, consolidated order inflows were at | 1157 crore, down 28% YoY owing to muted capex in several sectors. For FY19, order inflows comprise energy segment (| 4476 crore), environment segment (| 741 crore) & chemicals segment (| 415 crore). For FY19, order inflows were dragged by a decline of 28% in international inflows while domestic order intake was up 1% YoY. Order book was at | 5370 crore, down 6.0% YoY. We estimate order inflows of | 5850 crore, | 6480 crore for FY20E, FY21E,...

market is expected to see tendering from 2Q/3Q FY20 onwards. Sectors which are expected to witness ordering are Cement, Water recycling, Chemical, Textile, Agro Pharma etc. The company is positive on FGD and is L1 in couple of large orders which are expected to be received in FY20. On the international front, TMX sounded positive due to expected increase in demand in USA, Indonesia and Middle East. The execution of low margin order by Danstoker may continue in Q1FY20, however impact would be negligible in FY20. We expect TMX to report sales/PAT CAGR of 7%/15% over...

Operating performance ahead of expectations: Sales grew 44% YoY to INR20.7b in 4QFY19. EBIDTA increased 24% YoY to INR1.7b, as margin contracted 140bp YoY to 8.2%. Adj. PAT grew 64% YoY to INR1.2b, ahead of our estimate of INR979m, supported by a lower tax rate at 36%. Revenue growth to moderate due to lower opening order book: Weak order inflow (-12% for FY19) and healthy execution (+34% YoY) have led to a decline in order backlog (-6% YoY to INR53.7b). Thus, we believe revenue growth will moderate in FY20 (+7.7% YoY). However, with ordering activity showing signs...

Q3FY19 sales grew by 29% YoY due to strong execution in energy (30% YoY) and environment (23% YoY) segment . However, EBITDA margin declined by 108bps YoY to 7.5% due to rise in commodity prices and other expenses . Subdued growth in order inflow (5% YoY) due to tepid order conversion in core energy and environment segment . Adj. PAT increased by 11% YoY supported by higher other income (31% YoY) and lower tax . Core sector order inflow stand muted while rise in commodity prices is likely to impact operational margins in coming quarters. We maintain our Hold rating and value TMX at a P/E of...