Thermax jumps 7% on positive views from brokerages

Thermax should benefit from its transition into a company focused on clean energy, said Jefferies.

The Thermax share soared over seven percent in the morning trade on December 18 after brokerages maintained their positive views on the stock after an analysts’ meet.

Analysts expect the company, whose margin expanded in the September quarter, to sustain growth over the next four quarters due to the project mix and higher international sales.

At 12.08 pm, Thermax was trading 5 percent higher Rs 2,987 on the National Stock Exchange (NSE). The stock has rallied 52 percent this year against a 17 percent gain in the benchmark Nifty.

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International brokerage Jefferies has Thermax among its top industrial stock picks on strong order flows in the second quarter.

Thermax should benefit from its transition into a company focused on clean energy, Jefferies said, as it offered a “buy” call on the stock with a target price of Rs 3,800.

Recently, Thermax started offering flexi fuel boilers to accommodate a variety of biomass fuels; thermtron – electric heater to reduce the carbon footprint in heating applications; bio CNG; zero liquid discharge solutions; software solutions for tracking asset performance; and cooling solutions for heavy commercial vehicles by using exhaust heat.

According to analysts at ICICI Securities, there is limited competition in the new segments.

"Almost all the new products are quite promising; however, revenue potential is difficult to ascertain at this stage. We have an 'add' rating on Thermax with a target price of Rs 3,045. The stock is trading at 39x FY26E EPS of Rs 70/share," the domestic brokerage said.

Thermax's order inflows have started improving, with one large order of Rs 500 crore announced for bio-CNG plants.

Over FY23-26, domestic brokerage Motilal Oswal expects the company to post a 14 percent CAGR in revenue on the back of a strong order book (Rs 10,300 crore). It estimates a 21 percent growth in earnings, aided by revenue growth and margin improvement.

"We continue to value Thermax at 38X December, 25 estimated earnings and add value from green solutions. We maintain neutral rating on the stock with a target price of Rs 2,740 and would look for better entry points in the stock," the brokerage said in its report.

Also Read | L&T, Siemens, Thermax, KEI top picks for Jefferies in industrial sectors

Analysts at Prabhudas Lilladher believe that Thermax is well-placed to gain from increasing thrust on energy transition and de-carbonisation initiatives led by its sustainable green industrial solutions in bio-energy, heating & cooling, chemicals, and water; technical expertise; strong balance sheet and prudent working capital management.

"We maintain our ‘hold’ rating with a target price of Rs 2,771 (same as earlier), valuing it at a PE of 43x Sep’25E (same as earlier)," it said. The brokerage said it was positive on the long-term prospects of the company, while maintaining a neutral view for the near term given steep valuations.

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