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Prabhudas Lilladher
Thermax (Buy)
CMP: ₹955.10
Target: ₹1,105
Thermax (TMX) reported PAT of ₹130 crore, up 25 per cent y-o-y, which was higher than our’s and street estimates, largely driven by better-than-expected margins and higher other income. Operational efficiency and reduced losses in the water segment helped to improve margins. Order inflow for the quarter was down 18 per cent y-o-y. TMX highlighted that in domestic markets, enquiries for standard product business have improved meaningfully. However, large order finalisation from core sectors such as power/steel/ cement/ oil and gas is likely to take a few more quarters to pick up.
In export markets, West Asia remains subdued; however, it continues to see traction in the African markets. TMX’s increasing market share, strong product profile, increasing traction in export market and strong management pedigree gives us confidence that the company will be able to participate in the upturn of the cycle meaningfully and continue to surprise positively in terms of order flow.
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