Geojit Financial Services research report on Thermax
Thermax Ltd (TMX) is a leading energy and environment solutions provider. They offer integrated, innovative solutions in the areas of heating, cooling, power, water & waste management, air pollution control and chemicals. TMX reported in-line revenue growth of 13% YoY in Q1FY25, led by the industrial product (15% YoY) and green solutions (54% YoY). However, EBITDA margin declined by 38% YoY to 6.5% owing to one time provisions for industrial infra segment of Rs 73cr due to increased project costs. The order inflows were flat, impacted by elections and partly by the slowdown in ethanol based orders. The depleting order book (1.1x TTM revenue) may impact the revenue visibility for the coming quarters. The company expects traction in new orders with the order finalisations in sectors like power, steel, chemical, and biofuel.
Outlook
We reduce FY25 earnings estimate by 4.4% due absence of large orders and margin pressure. Due to expensive valuation and weak order inflow growth, we maintain our SELL rating with a TP of Rs3,968 based on a P/E of 50x on FY26 EPS.
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