Thermax - Result Update - ICICI Securities

Consolidated revenue came in at Rs. 1323 crore, down 36.2% YoY (vs. our estimate of Rs. 1300 crore) on the back of slower execution owing to Covid-19 lockdowns. Energy segment revenue declined 38.2% to Rs. 1051 crore YoY while environment segment revenue declined 25.6% to Rs. 199.1 crore and chemical segment revenue came in at Rs. 96.3 crore, down 6.1% YoY. Consolidated EBITDA came in at Rs. 63.6 crore, down 62.8% YoY, owing to higher employee expenses and other operating expenses. Consequently, EBITDA margin declined 340 bps to 4.8% YoY. Consolidated PAT came in at Rs. 39 crore, declining 69.2% YoY, impacted by 24.7% YoY increase in depreciation and higher effective tax rate.

Valuation & Outlook

Thermax' weak execution performance was a reflection of subdued order inflows, order backlog while margins further deteriorated due to some one-time higher operating expenses, Covid-19 that disrupted business activities. Expected orders in cement, pharma, food processing, refinery sectors orders would aid order inflows and order backlog. However, strong b/s, efficient working capital management provide a competitive advantage despite challenging environment. We expect adjusted revenue, EBITDA CAGR of 1.6%, 2.5%, respectively, in FY20-22E. Consequently, margins are expected to improve in long term on the back of easing commodity pressure and product innovations in medium term. We revise our target price to Rs. 830 (30x on FY22E EPS) and revise our rating from BUY to HOLD.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_Thermax_Q4FY20.pdf

Shares of THERMAX LTD. was last trading in BSE at Rs.738.95 as compared to the previous close of Rs. 751.15. The total number of shares traded during the day was 4988 in over 1062 trades.

The stock hit an intraday high of Rs. 770 and intraday low of 737. The net turnover during the day was Rs. 3728976.

Source : Equity Bulls

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