Hold Thermax; target of Rs 810: ICICI Direct

ICICI Direct's research report on Thermax

Consolidated revenue was at Rs 1141.2 crore, down 28.9% YoY (below our estimate of Rs 1191.9 crore) on slower execution. Energy segment revenue (contributing ~77.5% to revenue) fell 33.9% to Rs 885.8 crore YoY while environment segment revenue fell 13.5% to Rs 155.9 crore, chemical segment revenue was at Rs 114.5 crore, marginally up 3.6% YoY. However, EBITDA margin was better-than-expected at 7.0% (vs. our estimate of 3.6%) posting a decline of mere 120 bps YoY. Reported PAT came in at Rs 31.2 crore, up 21.5% due to tax adjustments in base quarter and impacted by exception items. Consolidated adjusted PAT (excluding exceptional items) comes to Rs 48.7 crore, up 89.4% YoY due to tax adjustments in base quarter.

Outlook

We expect adjusted revenue, EBITDA CAGR of -1.3%, 3.1%, respectively, in FY20-22E. We revise our target price to Rs 810 (30x on FY22E EPS) and maintain HOLD.

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