Prabhudas Lilladher has given Accumulate recommendation for Thermax with a target price of Rs. 2181 in its research report issued on May 23, 2022

Prabhudas Lilladher’s research report on Thermax

Thermax (TMX) reported healthy revenue growth of 26.5% YoY led by growth across key segments, while margins were impacted due to higher commodity and freight cost. In chemical’s segment margins were significantly impacted (2.8% in Q4FY22 vs 18.5% in Q4FY21) owing to higher input cost, supply chain disruptions and lesser price pass through. Order inflows came in at Rs34bn (up 127% YoY) in Q4FY22, led by two large orders won in FGD and Sulphur recovery units. Order book stands at Rs88bn (1.4x FY22 revenue). Pipeline remains healthy (up 20% vs pre Covid level) from industry such as Cement, Sugar, F&B, Petrochemicals, Refinery, Coal gasification etc. Despite short term challenges like higher input costs, supply chain disruptions, we believe, Thermax is well placed to gain from increasing thrust on clean energy & de-carbonization initiatives, broad base recovery in private capex given its 1) technical expertise, 2) strong balance sheet and 3) prudent working capital management.


Given the strong order book, enquiry pipeline and better execution, we expect TMX to report, revenue/PAT CAGR of 18.2%/35.2% between FY22-24E. At CMP stock is trading at 53x/39.9x for FY23/24E. We maintain Accumulate rating on stock with revise TP of Rs2,181 (Rs2,158 earlier).

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