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Thermax (THMX.BO) Rs423.60
Equity Research
First Take: Slightly higher than estimate on better cost management
News
Thermax reported 2QFY12 revenues of Rs 13 bn, implying 19% yoy growth
(4% and 6% above our and Bloomberg consensus estimates). Though the
cost of materials was higher, better management of employee costs (-0.5%
yoy) resulted in higher EBITDA margins than expected. The company
reported a 10.8% EBITDA margin (higher than our estimate of 9.9%) still the
lowest in the past 14 quarters.
The closing order book at Rs 57.7 bn (-2% decline qoq and -13% yoy)
implies order inflows of close to Rs 11.8 bn – a decline of 11% yoy.
Higher-than-expected other income of Rs 208 mn (+56% yoy and +41%
qoq) resulted in higher-than-expected net income.
Analysis
We believe the key driver of this performance has been better cost
management and higher other income, with order inflow weakness
continuing.
Structural concerns persist around increasing competition for large EPC
orders and there are no immediate signs of a pick up in industrial capex.
Implications
We put our estimates, price target and rating under review pending more
details from management on the company’s conference call.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Thermax (THMX.BO) Rs423.60
Equity Research
First Take: Slightly higher than estimate on better cost management
News
Thermax reported 2QFY12 revenues of Rs 13 bn, implying 19% yoy growth
(4% and 6% above our and Bloomberg consensus estimates). Though the
cost of materials was higher, better management of employee costs (-0.5%
yoy) resulted in higher EBITDA margins than expected. The company
reported a 10.8% EBITDA margin (higher than our estimate of 9.9%) still the
lowest in the past 14 quarters.
The closing order book at Rs 57.7 bn (-2% decline qoq and -13% yoy)
implies order inflows of close to Rs 11.8 bn – a decline of 11% yoy.
Higher-than-expected other income of Rs 208 mn (+56% yoy and +41%
qoq) resulted in higher-than-expected net income.
Analysis
We believe the key driver of this performance has been better cost
management and higher other income, with order inflow weakness
continuing.
Structural concerns persist around increasing competition for large EPC
orders and there are no immediate signs of a pick up in industrial capex.
Implications
We put our estimates, price target and rating under review pending more
details from management on the company’s conference call.
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