Hold Thermax; target of Rs 800: ICICI Direct

ICICI Direct's research report on Thermax

Consolidated revenue came in at Rs 665 crore, down 52.2% YoY (vs. our estimate of Rs 716.4 crore) on the back of slower execution owing to covid-19 lockdowns. Energy segment revenue (that contributes ~75% to revenue) fell 57% to Rs 500.4 crore YoY while environment segment revenue fell 43% to Rs 83.9 crore and chemical segment revenue was at Rs 84.3 crore, down 13.8%, YoY. It posted a loss of Rs 11.4 crore at the EBITDA level (vs. EBITDA of Rs 99.1 crore in Q1FY20), owing to higher employee expenses, other operating expenses and less booking of revenue. Consolidated loss after tax came in at Rs 15.3 crore (vs. PAT of Rs 62.8 crore in Q1FY20), partially impacted by 6.8% YoY increase in depreciation.

Outlook

Hence, margins are expected to improve in the long term on the back of product innovations in medium term. We revise our target price to Rs 800 (30x on FY22E EPS) and maintain our HOLD rating.

For all recommendations report, click here