ICICI Direct is bullish on Thermax has recommended buy rating on the stock with a target price of Rs 1265 in its research report dated February 12, 2019.
ICICI Direct's research report on Thermax
Standalone revenues came in at Rs 1248.2 crore, up 27.3% YoY (on proforma basis), higher than our estimate of Rs 1162.9 crore. Subsequent to the acquisition of TBWES, the board has approved transfer of boiler & heater business of Thermax to TBWES. Hence, the results of B&H business are classified as discontinued operations in standalone results (we restate Q3FY19 numbers for comparison). Consolidated revenue was up 28.6% to Rs 1437 crore YoY EBITDA came in at Rs 100.9 crore, up 9.2% YoY (below our estimate of Rs 104.7 crore), owing to 29.2% YoY increase in total operating expenses. Consequently, EBIDTA margins declined 130 bps to 8.1% on a YoY basis (below our estimate of 9.0%) PAT came in at Rs 48.2 crore, down 23.7% on a YoY basis owing to higher tax expenses and considering adjustments of exceptional items comprising impairment of investment in subsidiaries with net impact of Rs 27 crore to Thermax.
Consequently, with expected margin recovery in medium term, PAT is expected to grow at a CAGR of 37% over FY18-20E. We continue to maintain our BUY rating with a revised target price of Rs 1265/share.
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