Buy Thermax; target of Rs 865: YES Securities

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26 Aug, 2025 12:21

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We derive comfort from Thermax’s proven ability to emerge stronger after every downturn due to strong cash flow control & unlevered balance sheet. We believe TMX could achieve chemical sales of Rs10bn in medium term by increasing its market share from 2% as demand from North America remains strong. Specialty resins (USD1bn market globally) offers huge growth potential for TMX, it can grow to Rs5bn with 20%+ margin. Pricing sanity has returned in case of recent lot of FGD orderings in FY20 & we see order finalization of Rs150bn over next 12-months (Lot 5&6), where TMX might receive order inflow of ~Rs15-20bn. TMX expects order inflows of Rs10-12bn from domestic refineries by H1FY21 end. Capex in the O&G space is being driven by upgrades related to BS-VI emission norms (Rs350bn spend) and brownfield/greenfield refinery and petrochemical expansions by state-owned companies. Government’s measures on increasing pharma API production domestically should benefit TMX. As global backlash is building against China, we think TMX has an upcoming opportunity of increasing its international deal win share especially in markets like Europe, LATAM & Africa.

TMX has started execution on 85% of OB while rest may get delayed. Mgmt. expects incremental order inflows to come from FMCG, Pharma, Refinery, FGD & Dairy while large ticket order recovery from cement, fertilizer & steel sectors could happen by Q4FY21.

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