Buy Thermax; target of Rs 700: Motilal Oswal
Brokerage house Motilal Oswal is bullish on Thermax and has recommended a buy rating on the stock with a price target of Rs 700, according to its research report dated May 23, 2013.
June 08, 2013 / 16:27 IST
Motilal Oswal's research report on Thermax
"Thermax's (TMX) 4QFY13 operating performance was above estimates led by higher-than-expected revenue and EBITDA margin. Revenue stood at INR14.7b, down 13 percent YoY (v/s est of INR14.2b, down 16 percent YoY), while EBITDA at INR1.7b was much higher than est of INR1.5b. EBITDA margin stood at 11.4 percent, up 40bp YoY, v/s est of 10.4 percent. Improvement in margins was led by lower raw material cost and lower SG&A Net profit at INR1,153m declined by 11 percent YoY.""Order inflow robust; up 43 percent YoY: Order inflow during 4QFY13 stood at INR11.5b, up 43 percent YoY, while consolidated order backlog at end-FY13 was at INR48.8b v/s INR48.3b YoY."'Maintaining FY14 margins challenging; order growth likely to be in double digits: Management mentioned that visibility for FY14 on medium sized projects in comparison to last year has deteriorated. However, TMX expects a double digit growth in order inflow during FY14. Company expects maintaining margins in FY14 at current levels would be challenging, though softening commodity prices in the last three month should play out favorably.""Subsidiaries continue to report losses amid strong headwinds: Revenue from subsidiaries for 4QFY13 was at INR2.2b v/s INR2.1b in 4QFY12, while losses at INR107m have again increased after showing a declining trend for the past two quarters.""Working capital under strict control: Net working capital has been largely maintained at 17.9 days in March 2013 v/s 15.1 days in September 2012, which is commendable given the constrained environment.""Valuation and view: We have revised the estimates and also lowered the target price. We maintain a Buy with a revised SOTP-based target price of INR 700," says Motilal Oswal research eport.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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