Accumulate Thermax; target Rs 484: Unicon Investment

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Accumulate Thermax; target Rs 484: Unicon Investment

Unicon Investment is bullish on Thermax and has recommended accumulate rating on the stock with a target price of Rs 484 in its November 18, 2011 research report.

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Unicon Investment is bullish on Thermax and has recommended accumulate rating on the stock with a target price of Rs 484 in its November 18, 2011 research report.

"Thermax (THMX) outperformed street expectations in Q2 FY12. On standalone basis topline grew 19.8% YoY to INR 13bn. Energy and Environment segments revenues of INR 10.3bn and INR 2.9bn, were up by 16% and 20% respectively. EBITDA increased by 13.7% YoY to INR 1,613mn while EBITDA margin shrunk 63bps to 12.4%. Raw material cost and other expenditure increased 23% and 25% respectively in the quarter. Net profit increased by 13.6% to ~INR 1,017mn due to 56% in other income. Net profit margin stood at 7.7% in the quarter."

"On consolidated basis, order book stood at INR 65.3bn i.e. 1.2x FY11 sales, 10% lower on YoY basis. Order inflows in the quarter stood at INR 12.8bn. THMX was the highest bidder in NTPC bids for 800 MW x 9 units of boilers. The company placed bids ~25% higher than the L1 bidder Doosan Heavy Industries. THMX has seen healthy order intake from Oil and Gas, ferrous metals, Cement, Power, mining and Chemicals in the current quarter. No order was added in the EPC segment due to lull in new order inflow. The management remained cautious in finalizing bids for EPC orders. The company expects order flow to slow down in H2 FY12 due to slowdown in power sector orders, increase in interest rate and elevated steel prices (~85% of total raw material cost). Intensifying competition in the supercritical BTG space would also impact order inflow."

"We have reduced our FY12 and FY13 revenue growth estimates to 8% and 11% respectively due to delay in project execution (in energy segment) and slowdown in order inflows. We recommend Accumulate rating on the stock with a price target of INR 484," says Unicon Investment research report.

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