Hold Thermax; target of Rs 5481: Sharekhan

Sharekhan's research report on Thermax

For Q2FY2025, Thermax reported 13% y-o-y revenue growth. The revenue growth was led by growth across segments. The current quarter’s revenue and profit were favourably impacted by an accrual of Rs. 66 crore as income towards the incentive receivable under the Maharashtra government’s Packaged Incentive Scheme. Operating profit grew 36% y-o-y to Rs. 278 crore. OPM improved by 176 bps. In line with revenue and operating profit growth adjusted PAT grew 24% y-o-y to Rs. 197 crore against expectation of Rs. 180 crore. Order booking is significantly higher by 70% y-o-y due to two orders worth Rs. 1,029 crore received for setting up an energy project from industrial conglomerate in Botswana, South Africa.

Outlook

With weak orderbook visibility and premium multiples, we maintain our Hold rating on the stock. The future growth prospects related to company’s investments in green energy are already factored in the stock price. The stock is currently trading at ~63x/55x its FY2026E and FY2027E EPS.

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