Downtrend to hurt Thermax? Find out what analysts say

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Downtrend to hurt Thermax? Find out what analysts say

Capital goods maker Thermax announced its December quarter results on Friday. Its profits for the quarter declined 5% to Rs 95 crore year-on-year mainly due to high input cost and forex losses.

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Moneycontrol Bureau

Capital goods maker Thermax announced its December quarter results on Friday. Its profits for the quarter declined 5% to Rs 95 crore year-on-year mainly due to high input cost and forex losses.  Sales, however marginally grew 2% to Rs 1,269 crore on the back of weak order inflows shrinking around 40% to Rs 5,809 crore y-o-y.

M.S Unnikrishnan, the company's managing director told moneycontrol.com that despite the overall capital goods sector not performing well during the quarter, his company managed to sail through without bruises because of a fairly de-risked portfolio. The Pune-based company caters to power, cement, environment and chemical sectors.

Of the Rs 5,809 crore orders that the company procured in the Oct-Dec quarter, 14% came from power segment, 7% from food processing, 8% from chemical and the remaining from other sectors.

But analysts believe like its peers Bharat Heavy Electrical Ltd (BHEL) and Crompton Greaves even for Thermax a bigger worry lies in stagnant order flow from the domestic market, hence it will have to stretch capacities for atleast a few quarters.

Have a look at what different brokerages have to say about Thermax.

Goldman Sachs
The firm has downgraded Thermax to sell from Neutral with a price target of 384 citing deteriorating order inflow prospects. The company reported the sixth sequential order-inflow decline in its December quarter results, leading to a 19% dip in backlog y-o-y.

Nirmal Bang
Capex climate in cement, power and oil and gas sectors will be muted even in the ensuing quarters to which Thermax caters. Also, we see no large orders at the negotiation stage currently. Taking these factors into account, the firm has assigned a "sell' rating on the stock with a target price of Rs 375

ICICI  Direct
Though the company maintained an EBITDA margin of 10.7% for the Dec quarter, the sustenance of the same will come under attack if orders do not pick up which we have factored in our estimates. The firm has assigned a 'sell' rating on the stock with a target of Rs 401.

Emkay Global
The company management shared muted growth outlook till FY13 based on slow orders and continued deferrals in order finalisation. It indicated continued competitive pricing pressure amidst industry-wide deterioration in order books. Based, on these factors, the firm has downgraded the stock to 'hold' with target of Rs 495

Shaheen Mansuri
shaheen.mansuri@network18online.com