Hold Thermax; target of Rs 955: Sharekhan

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26 Aug, 2025 12:21

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Sharekhan's report onThermaxRevenue slippage drags earnings; subsidiaries’ performance improved: Thermax (stand-alone) reported a weak result in Q2FY2016; earnings declined by 25% YoY to Rs65 crore, as revenue slipped by 11% YoY with tepid order inflow. Decline in revenue played negative operating leverage; hence operating profit margin contracted by 92BPS YoY despite a 114-BPS improvement in gross profit margin over last year. Consequently, earnings were negatively affected during this quarter, which negatively surprised the Street. On the positive side, the performance of subsidiaries improved substantially; PAT of all subsidiaries turned positive (Rs2 crore) against a loss of Rs50 crore in Q2FY2015. Consequently, the consolidated PAT jumped sharply (up 82% YoY) to Rs 67 crore in this quarter, against Rs 37 crore in Q2FY2015.Revised down earnings estimates and retain Hold: The management commentary regarding order inflow visibility is not encouraging during the postresult conference call. As reflected in the Q2 result, based on a slower-thanexpected order inflow outlook and weak revenue traction, we are revising down our revenue as well as earnings estimates by 12-14% for FY2016 and FY2017. However, improvement in bottom-line performance of subsidiaries was a positive surprise, which is expected to be sustained in future. In line with the revision in earnings estimates, we have cut our price target to Rs 955 and retained Hold rating on the stock due to its rich valuation and flattish earnings outlook, says Sharekhan research report.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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