Buy Thermax; target of Rs 2950: Sharekhan

Sharekhan's research report on Thermax

Consolidated Q1 numbers exceeded estimates led by strong sales and operating profits. Net profit came in flat as it was affected by a provision of ~Rs. 51 crore w.r.t. a litigation. Company expects order intake to grow y-o-y in FY24, albeit, it will be largely driven by base orders of Rs. 500 crore or less. Thermax expects profitability to further improve as execution of high-margin orders, scaling up of chemicals business and benign commodity prices come into play.

Outlook

We maintain a Buy on Thermax with a revised PT of Rs. 2,950, as we expect the company’s new focus areas would yield results in the long term despite near-term headwinds. We build in a ~16%/~33% revenue/PAT CAGR (FY23-FY25E). Further, a healthy balance sheet give us comfort.