Hold Thermax; target of Rs 2771: Prabhudas Lilladher

Prabhudas Lilladher's research report on Thermax

At the recent Thermax Fest held on December 15th, 2023, TMX showcased its innovative solutions across coal gasification, bio-CNG & biomass fuels, green hydrogen, renewable hybrid energy, construction chemicals, water, cooling & heating technologies, Thermal HVAC and industrial asset management. Although international manufacturing has not worked out as planned, there are some opportunities in Africa, Middle East and South East Asia. India, however, remains the fastest growing market for Thermax’s offerings and the company is looking to capitalize on opportunities arising out of government policies on carbon footprint reduction, green energy, wastewater treatment, etc. Meanwhile, the chemicals business is unrelated to the energy transition theme, yet is expected to grow strongly over the next 4- 5 years.

Outlook

The stock is currently trading at a PE of 46.4x/41.5x FY25/26E. We maintain our ‘Hold’ rating with a TP of Rs2,771 (same as earlier), valuing it at a PE of 43x Sep’25E (same as earlier). We are positive on the long-term prospects of TMX, while maintaining a neutral view for the near-term given steep valuations.

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