Buy Thermax; target of Rs 675: Motilal Oswal
Brokerage house Motilal Oswal is bullish on Thermax and has recommended buy rating on the stock with a target price of Rs 675, in its research report dated November 07, 2013.
December 03, 2013 / 16:05 IST
Motilal Oswal's research report on Thermax
"Thermax, standalone revenues stood at INR10.4b (down 12.5 percent vs est of down 10 percent), EBIDTA at INR937m (down 23 percent YoY vs est of down 12 percent) and adjusted Net Profit at INR592m (down 35 percent, vs est of down 20 percent). Reported EBIDTA margins are down 123bp YoY to 9 percent and is largely impacted by project level provisions / MTM forex impact (PBT impact of INR100m), adjusted for which EBIDTA margins stand at 9.9 percent. Order inflow for 2QFY14 stood at INR7.7b, down 34 percent YoY (vs run rate of INR12.1b/qtr in FY13), with domestic intake at just INR5.5b (vs run rate of INR9.3b/qtr in FY13) and is a worrying factor. Export orders at INR2.1b have remained stable largely given muted intake in product businesses.""Subsidiaries reported profits of INR51m in 2QFY14 / INR27m in 1QFY14 vs losses of INR37m YoY. The subsidiary performance has now sustained for 2 quarters and is aided by lower losses in Chinese subsidiaries (1HFY14 at just INR10m) and Thermax Instrumentation (expect breakeven by end FY14), plus strong traction in waste to energy projects in Europe (Danstoker). Babcock JV reported loss of INR90m in 2QFY14, and is ready to start production.""Another positive has been Net Working Capital cycle, which has remained stable YoY at 15.2 days, and is commendable in a constrained environment. Cash balance has improved from INR6.2b in March 2013 to INR6.7b in Sept 2013. We are cutting estimates and now expect consolidated EPS at INR25.2/sh in FY14 (down 7 percent YoY) and INR29.1/sh in FY15 (up 15.4 percent YoY). Maintain Buy with price target of INR675/sh (20x FY15 PER for standalone and 15x for subsidiaries)," says Motilal Oswal research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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