We attended Thermax’s analyst meet where company demonstrated its innovative technologies and bespoke solutions for the green solutions segment to cater to energy transition needs of customers. Through its two subsidiaries TOESL and FEPL, company offers a range of products and services across bio energy and renewable. It also has lined up plans to enter into coal gasification and electrical energy solutions including electric pumps. We expect company to continue to invest in these initiatives over next few years. These new products, though higher in pricing than traditional products by 30- 40% but will be RoI accretive based on energy cost savings. Order inflows have started improving with one large order of INR5b announced for bio-CNG plants. Over FY23-26, we expect Thermax to post a 14% CAGR in revenue on the back of a strong order book (INR103b; OB/Rev: 1.1x). We estimate a 21% CAGR in earnings, aided by revenue growth and margin improvement.
OutlookWe continue to value Thermax at 38X December, 25 estimated earnings and add value from green solutions. We maintain Neutral rating on the stock with a TP of INR 2,740 and would look for better entry points in the stock.
For all recommendations report, click hereDisclaimer: 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.
Thermax - 15 - 12 - 2023 - motiDiscover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
