Hold Thermax; target of Rs 2771: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Thermax with a target price of Rs 2771 in its research report dated October 06, 2023.

Broker Research

November 09, 2023 / 10:55 IST

Hold

Prabhudas Lilladher's research report on Thermax

Thermax (TMX) reported healthy quarterly performance, with consolidated revenue growth of 10.9% YoY and EBITDA margin expanding 211bps YoY, driven by few projects reaching above average margin recognition level in Q2FY24. Order inflows were down by 2.1% YoY to Rs19.7bn in Q2FY24 due to absence of large orders, however management is bullish for H2FY24 on order inflows front with couple of large order under discussion stage. Domestic enquiry pipeline, continues to remain healthy for medium size order from food & Beverages, Chemicals, metals etc. Exports enquiry pipeline continues to remains strong. Large orders from Oil & Gas sectors is muted while it is gaining traction in Steel & Metals sector.

Outlook

We believe TMX is well placed to gain from increasing thrust on energy transition & de-carbonization initiatives led by its 1) technical expertise, 2) strong balance sheet and 3) prudent working capital management. The stock is currently trading at PE of 55.3x/47.6x/42.5x FY24/25/26E. We roll forward to Sep’25E and maintain ‘Hold’ rating with revised TP of Rs2,771 (Rs2,613 earlier), valuing it at PE of 43x Sep’25E (43x FY25E earlier).

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