Buy Thermax; target of Rs 3235: Sharekhan

Sharekhan's research report on Thermax

The FY23 annual report focuses on tapping opportunities in green energy in both domestic and overseas markets by expanding the product portfolio and increasing scope of its services and solutions. The company has a pipeline of international orders worth Rs. 2,000 crore, while the mid to small order pipeline in the domestic market is also encouraging in the near term. Thermax has a well-diversified order book of Rs. 10,505 crore. Contribution of high margin and low capital intensive- products and services business has also increased to ~49% (vs 38% in FY22) in order bookings.

Outlook

We maintain a Buy on Thermax with a revised PT of Rs. 3,235, as we believe that apart from traditional business, its new focus areas – BOO model for wind/solar projects and new products in chemicals business would yield results in the long term. We build in a ~15%/~29% revenue/PAT CAGR (FY23-FY26E) and roll forward our estimates to September FY25E EPS.

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