Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    

| More

Thermax - Tempered by global macro challenges - ICICI Securities

Posted On: 2020-07-29 22:14:45

Thermax has successfully withstood global cycles before on the strengths of its focus on cashflow, uncompromising terms of trade and steering clear of risks. Post the global economic meltdown, the company had strategically looked at opportunities for global expansion. It had its share of successes and failures; however, the management was always prudent to change gears in the face of changing adversities. European restructuring process is expected to yield dividends while Chinese operations have been wound off and Indonesian expansion is continuing. Though near-term challenges persist, we believe Thermax has a strong balance sheet and financial discipline to sail through. Factoring-in the challenging outlook, we cut our earnings by 10.8% and 4% for FY21E and FY22E respectively. Maintain HOLD with a revised target price of Rs740 (previously Rs772).

- Challenging near-term outlook: Order intake was down 2.4% YoY to Rs55bn in FY20, supported by Rs9bn of FGD orders. Current orderbook at Rs52.4bn (0.9x TTM sales) is spread across the sectors; however, the global demand slowdown will adversely impact overall growth in the near to medium term.

- Subsidiary stress continues: Indonesia losses have reduced while Danstoker performance was hit due to the pandemic. Europe has witnessed relatively better revival in terms of order intake vs the other geographies. Given the overall environment, we believe the timeline for breakeven in Indonesia operations is likely to get delayed.

- Strong balance sheet: Cash from operations stood at Rs3.3bn and free cashflow was Rs3.9bn during FY20. Company currently has cash and current investment of Rs12.9bn, which can shield it during these turbulent times.

- Expect traction from small and medium sized orders in FY21: Large orders from sectors like steel, cement and fertilisers will be scarce in the near to medium term. However, some green shoots are visible in the FGD segment from the private sector and Lot-6 FGD orders from NTPC. Oil&Gas outlook is healthy with orders from HPCL Barmer refinery likely to be finalised by subcontractors including L&T and Tata Projects. Other opportunities are in the food processing and pharma API sectors.

- Maintain HOLD: Dependence on private sector capex puts Thermax on the backfoot vs peers. Hence, we maintain our HOLD rating on the stock with a revised target price of Rs740 (previously Rs772). Given the depressed earnings of FY21E due to Covid, we value the stock at a P/E multiple of 30x on FY22E earnings.

Shares of THERMAX LTD. was last trading in BSE at Rs.742.2 as compared to the previous close of Rs. 745.4. The total number of shares traded during the day was 1464 in over 347 trades.

The stock hit an intraday high of Rs. 748 and intraday low of 735.05. The net turnover during the day was Rs. 1089642.

Source: Equity Bulls

Click here to send ur comments or to

Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only., its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.

Other Headlines:

HeidelbergCement India - Play on better priced Central India; initiate with BUY - ICICI Securities

Healthcare - Diagnostics: Multiple tailwinds likely to emerge - ICICI Securities

Mazagon Dock Shipbuilders Ltd - IPO Review - ICICI Securities

Persistent Systems - 28th September 2020 - Angel Broking

Canara Bank - 28th September 2020 - Angel Broking

Subscribe to UTI Asset Management Company Limited - IPO Note - Angel Broking

Multiplex Sector - Mr. Jyoti Roy - DVP - Equity Strategist, Angel Broking Ltd

Sale of Sequent stake to Strides Pharma - Angel Broking

Subscribe to Mazagon Dock Shipbuilders Ltd - IPO Note - Angel Broking

JSW Energy - First big renewable step - ICICI Securities

V-MART Retail - Best play in value fashion segment; initiating with BUY - ICICI Securities

Gas sector - New winners and losers likely on policy changes in gas sector - ICICI Securities

Mazagon Dock Shipbuilders Limited - IPO Note - Geojit

UTI Asset Management Company Limited - IPO Note - Geojit

Preview on RBI Monetary Policy - Oct 2020 - Shanti Ekambaram

Rollover Report for September 2020 - October 2020: Angel Broking

Covid Recovery Pulse - Sep 25, 2020 - ICICI Securities

Quick Comment - Suven Pharmaceuticals - ICICI Securities

Derivatives Strategy - Sep 25, 2020 - Positional Option - ICICI Securities

Gladiator Stocks - Ramco Cement - ICICI Securities

IPO Review - UTI Asset Management Company - ICICI Securities

Stock of the Day - Zensar Technologies - Sep 25, 2020 - Angel Broking

Accenture Q4FY2020 Result - Angel Broking

Granules India receives ANDA approval - Angel Broking

Zydus Cadila receives US FDA approval - Angel Broking

Cipla - ANDA approval - Mr. Yash Gupta - Equity Research Associate, Angel Broking Ltd

Mindspace REIT - Mr. Yash Gupta - Equity Research Associate, Angel Broking Ltd

UTI AMC - IPO - Mr. Jaikishan Parmar - Sr. Equity Research Analyst, Angel Broking Ltd

Balkrishna Industries - Growth momentum continues - ICICI Securities

Rollover Analysis (September 25): Nifty starts October series with low OI amid high volatility

Derivatives View (September 25): Sell Bank Nifty in range of 20650-20750 - ICICI Securities

Rollover Analysis - Sept 20: Selling climax on expiry as markets crumble - YES Securities

Zydus Wellness - Leadership in niche categories; initiate at BUY - ICICI Securities

Power - Setting the stage - ICICI Securities

Company Update - Elgi Equipments - ICICI Securities

Nano Nivesh - The Anup Engineering - ICICI Securities

RBI OMO announcement of Rs. 10000 crore - Angel Broking

TCS deal win - Sep 24, 2020 - Angel Broking

View on Pre-Monetary Policy by Upasna Bhardwaj, Senior Economist at Kotak Mahindra Bank

US FDA approval to Zydus Cadila - Angel Broking

HDFC Securities Institutional Research Desk: Cement Sector Thematic - Spotting the sweet spot

Bharat Forge - Expectation hurdle remains steep - ICICI Securities


Mutual Fund Review - September, 2020 - ICICI Securities

UTI AMC announces IPO date - Angel Broking

Asian Paints - Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd

Britannia Industries - Mr. Amarjeet Maurya - AVP - Mid Caps, Angel Broking Ltd

Hexaware Technologies (Not Rated): Hexaware accepts 475/share as final delisting price - ICICI Securities

CAMS IPO - Day 2 Subscription - Angel Boking

Chemcon Speciality Chemicals - IPO subscribed 12.62 times on second day - Angel Broking

Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2019