Reduce Thermax; target of Rs 4275 Prabhudas Lilladher

Prabhudas Lilladher recommended reduce rating on Thermax with a target price of Rs 4275 in its research report dated November 15, 2024.

Broker Research

November 18, 2024 / 10:06 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Thermax

We revise our FY25/26E EPS by -8.3%/-2.1% factoring in weaker margin profile. Thermax (TMX) reported 10.6% YoY revenue growth with EBITDA margin declining by 56bps YoY to 8.3%. The board has decided to refrain from large super critical power projects in Industrial Infra given the cash flow & execution risks. However, the pipeline for large orders across steel, petrochemicals and refineries is picking up. Further, execution of the two large orders in Botswana and closure of less profitable FGD orders offer a positive outlook for the segment. Industrial Products is witnessing healthy growth in water treatment and environmental solutions, while small boiler business remains slow, which is expected to partially dilute the segment margin. Both Industrial Products and Chemicals segments are seeing increasing traction in international markets. In Green Solutions, TOESL continues to grow steadily. TMX has set up 200 MW capacity in green assets and is aiming to achieve 600 MW by FY26 and 1GW by FY28.

Outlook

We believe TMX is well placed to gain from increasing thrust on energy transition & de-carbonization led by its 1) sustainable green industrial solutions in bio-energy, heating & cooling, chemicals, and water, 2) technical expertise, and 3) prudent working capital management. We maintain ‘Reduce’ rating with a revised SoTP derived TP of Rs 4,275 (Rs4,186 earlier), valuing the core business (ex. Green Solutions) at a P/E of 50x Sep’26E (50x FY26E earlier).

For all recommendations report, click here