Thermax Ltd. share price target

Thermax Cautious on Near-term Outlook: Thermax Q2 revenue grew by 38% YoY and earning grew by 31% YoY. Earningsfor Q2 were higher than our estimate by ~ 13% primarily on surprise from higher treasury income, adjusted for the same earnings were in-line with our estimates.

Thermax Q1 In-line with Estimates: Thermax's consolidated revenue grew by 19% to Rs. 10.3 bn and EPS reached Rs. 3.8 in Q1 which is in-line with our estimates for Q1. The revenue growth came in on account of pickup in execution of projects and traction for standard products in the standalone business.

The subsidiary performance was a cause for concern with Danstoker A/S Denmark continues to report losses for the quarter due to cost overrun in some orders. Thermax' European operations underperformed with...

9 August 2018 improved 18.7% YoY to INR10.4b (est. Despite strong growth in revenue, EBIDTA of INR693m (-3.9% YoY) was meaningfully below our estimate of INR1.0b on account of a weak performance of subsidiaries. Net profit increased 21% YoY to INR0.5b (est. of INR0.6b), supported by higher other income (INR310m v/s INR241m in 1QFY18) and share of profits from JV/associates (profit of INR3m v/s a loss of INR67m in 1QFY18). TMXs revenue rose 19% YoY to INR8.5b, led by a weak base of 1QFY18 (INR800m sales loss on account of GST-led ambiguity, and impact to the tune of INR350m on exports revenue as the JNPT port was infected by malware).

After 3 consecutive years of contraction, Thermax (TMX) reported a sharp jump in order inflows (up 45% YoY) in FY18, but management guides for a cautiously optimistic outlook amid rising interest rates and the run up to the 2019 elections. Key takeaways from TMX's FY18 annual report are: a) a cautious outlook on order inflows, to be driven largely by 2 sectors: consumer-led industries (food, beverage, textiles, tyres and automobiles) and emission norm-related capex (power and oil & gas); b) expanding its manufacturing footprint through new facilities in Indonesia, Dahej and the acquisition of assets in Poland to counter cyclicality in sales; c) margin decline being restricted to 70bps in FY18 as projects' improved...

Over the past five years, Thermax has witnessed drying up of large orders from the core sectors (Power, Steel, Cement and Refining), leading to volatility in its sales. Thermax is primarily in absorption chillers. 2. Thermax is the market leader in the B2B segment but has <1% share in the commercial segment. It targets a double-digit market share in the commercial segment. 3. Rooftop solar (INR10b industry) is an emerging market and Thermax would be present in the industrial and commercial segments. Thermax intends to expand footprint and achieve double-digit profit in this segment. Enquiry pipeline for standard products (INR4b-6b quarterly) has improved in FY19 it is more widely spread across the end markets of tyres, auto components, F&B;, segment, there are a few projects in the pipeline, with orders likely to be placed in FY19. a few captive power plant orders are in the pipeline along with WHRG.

Thermax Ltd (TMX) is a leading energy and environment solutions provider. They offer integrated innovative solutions in the areas of heating, cooling, power, water & waste management, air pollution control and chemicals . Order book grew by 47% YoY to Rs5,302cr (1.4x TTM revenue) supported by 44% rise in order inflow. Q4FY18 sales & PAT declined by 2.4% & 5% YoY (below estimate), due to slower execution in environment & chemical business...

Thermax Ltd (TMX) is a leading energy and environment solutions provider. They offer integrated innovative solutions in the areas of heating, cooling, power, water & waste management, air pollution control and chemicals . Order book grew by 47% YoY to Rs5,302cr (1.4x TTM revenue) supported by 44% rise in order inflow. Q4FY18 sales & PAT declined by 2.4% & 5% YoY (below estimate), due to slower execution in environment & chemical business...

Thermax (TMX) revenue was down by 3% in Q4FY18 mainly on account of issuesrelated to e-way bill which was quantified at around Rs. 2 bn by the management. However, this is normalising in Q1FY19. Operating margins were lower by 200 bps for the quarter on account of slower execution, higher material prices,costs associated with few facilities and provisions related to Chinese litigation.

Thermax reported a weak set of Q4FY18 numbers as revenue and profitability declined YoY, below our estimates. The key takeaway was the consistency and growth in order intake giving some green shoots to return to growth path Revenues came in at | 1310.1 crore, down 2.4% (below our estimates of | 1459.7 crore). For FY18, standalone revenue declined marginally by 0.5% YoY to | 3889 crore EBITDA came in at | 149.9 crore, with a decline of 1.4% vs our...