Prabhudas Lilladher has given Accumulate recommendation for Thermax with a target price of Rs. 1559 in its research report issued on May 26, 2021

Prabhudas Lilladher’s research report on Thermax

Thermax Ltd (TMX) reported a health quarterly performance led by execution pickup across verticals and recovery in industrial activity. Revenue across Energy/ Environment/ Chemical segments grew by 11.8%/ 51.6%/ 24.0% YoY. Despite steep increase in raw material prices, gross margins came in healthy at 48%, led by change in revenue mix. Further order inflows continued its momentum with TMX securing projects worth ~Rs15bn in Q4FY21, owing to huge traction seen in Energy segment. OB also stands comfortable at Rs52bn (1.1x TTM revenues) providing healthy revenue visibility. Management indicated good traction in order inflows from sectors such as Cement, Steel, Refinery, Chemical, Pharma and F&B which would be key growth drivers going ahead. We believe TMX is well capitalized to revive in the long term given 1) its strong balance sheet (Cash of Rs19.4bn as on FY21), 2) prudent working capital management and 3) expected recovery in capex.


In the near term, we expect business operations both domestic and international to remain under pressure, owing to second wave of Covid. We have marginally revised our estimates upwards by 1.8% in FY23 and maintain our Accumulate rating on the stock with revised TP of Rs1,559 (earlier TP was Rs1,008) valuing the stock at 38x FY23 earning estimate.