Accumulate Thermax; target of Rs 798: Prabhudas Lilladher

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26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Thermax

Thermax Ltd (TMX) reported weak quarterly performance owing to subdued capex activity and deferment of orders in majority sectors leading to decline in revenue and order book. Revenue declined by 29% YoY largely attributed by de-growth in Energy/Environment segments by 34%/14% while Chemical division grew by 4 %YoY respectively. Profitability was impacted due to lower sales, one-time exceptional item (~Rs245mn) for VRS, impairment of certain assets of Boiler works and provision towards closure of German subsidiary claims. Ordering activity was muted across segment resulting into weak order inflows of Rs11bn. OB stands at Rs52bn providing revenue visibility ahead. Sectors like F&B, Pharma, Chemicals, Steel and Cement are expected to drive growth going ahead. Order inflows are expected to remain challenged in medium term as industrial/private capex would be muted. The pickup in international enquiry may bring some respite in H2FY20.

Outlook

TMX’s strong balance sheet and efficient working capital management will help company’s sale in this unprecedented times. The stock is currently trading at P/E of 33.2x/22.6x FY21E/22E. We maintain our Accumulate rating on the stock with TP of Rs798 (unchanged).

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