Angel Broking has maintained neutral rating on Thermax in its November 5, 2012 research report. The research firm expects Thermax’s return ratios to continue to deteriorate. Also expect Thermax- BW JV to weigh in on consolidated profits going forward as its utilization remains muted.
“Thermax’s top-line performance was below our estimates with revenue coming in at Rs1,192cr (down 8.5% yoy) for 2QFY2013. However, the company was still able to maintain double digit margins at 10.2% (decline of 57bp yoy), in spite of few low margin orders being executed during the quarter. Consequently, the net profit came in at Rs91cr (down 10.3% yoy).”
“The company reported a decline in its top-line by 8.5% yoy to Rs1,192cr on account of weak execution in both, the energy and the environment segment, which saw a fall in revenue by 9.7% yoy to Rs934cr and 7.3% to Rs275cr respectively. Order inflow for the quarter declined by 10% yoy to Rs1,162cr taking the total order backlog to Rs4,984cr (decline of 24% yoy) on a consolidated basis. The company secured a major EPC order of Rs280cr for a power plant in North India during the quarter. The company’s Chinese subsidiary and Thermax Instrumentation (EPC arm of Thermax) are still making losses. Although, the Danstoker subsidiary has posted a profit of 1mn euros in 2QFY2012, it has lower margin orders.”
“Thermax remains one of the most expensive stocks in our coverage universe trading at 18.6x FY2014E EPS estimates. Amid a weakening order inflow and working capital outlook, we expect Thermax’s return ratios to continue to deteriorate. We also expect Thermax- BW JV to weigh in on consolidated profits going forward as its utilization remains muted. Hence, we maintain neutral rating on the stock,” says Angel Broking research report. Shares held by Insurance Companies 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. To read the full report click on the attachment
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