Thermax Ltd (TMX) reported steady set of numbers wherein revenue de-grew by 2% YoY led by growth in the Chemical segment which grew 4.5% YoY. PAT grew 12% YoY on back of lower interest cost and effective tax rate for the quarter. Order inflows (OI) were strong with 8.5% YoY growth, which mainly came from healthy orders bagged in the domestic market. International market witnessed de-growth in OI due to delay in finalization of orders. Going ahead, company expects to receive more medium to short cycle orders from sectors like Cement, Food Processing, Water recycling, Waste to energy Chemical, Pulp & Paper, Agro Pharma etc. Currently order backlog stands at Rs54bn (down 16% YoY) and is expected to revive as Management has seen a pickup in enquiry levels in both Domestic and International markets. Management expects flat revenue for FY20 compared to FY19. We expect TMX to report sales/PAT CAGR of 8%/14% over next two years (FY19-21E).
OutlookThe stock is currently trading at 38.6x/28.7x FY20E/21E. We maintain our Accumulate rating on the stock with TP of Rs1143 (30x FY21E).
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