LKP Research's research report on Thermax
Thermax (TMX) witnessed a decent Q1FY24 performance wherein the execution was inline while legacy FGD projects execution continue to weigh on industrial margins. TMX reported revenue/EBITDA/APAT of ₹19/1.3/1.1bn Order inflows sustained momentum in Q1FY24 at ₹25.7bn driven by multiple boiler orders from the steel & distillery sectors. Strong ordering pipeline commentary from management with good medium-sized projects seen across different sectors. Going ahead, we expect order inflow would continue to stay strong with major project announcements (during recent 12-15 months) by core industries while large orders would likely follow by Q4FY24. In exports, enquiry pipeline remains strong, driven by waste to energy, waste heat recovery, and biomass projects. After plateauing over the past two quarters, TMX’s order book has risen from ₹97bn in Q4FY23 to ₹105bn. The Q1 order inflow stood at ₹25.7bn, with base orders forming 70-75% and growing in double digits.
Outlook
Going forward, TMX stands to benefit from the investment in clean energy, sustainability, decarbonisation, normalisation of the international market and impetus on cleaner air and water. Hence we recommend BUY with a price target of ₹2,825 (40x FY25E EPS).
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