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Thermax
Thermax announced its 2QFY2012 results which were well ahead of our and
street expectations. Top line grew by 19.4% yoy to `1,303cr (`1,092cr) which
was higher than our expectation of `1,168cr. The growth was driven by strong
execution of orders in both the Energy and Environment segment which posted
16% yoy growth to `1,035cr (`891.0cr) and 19.1% yoy growth to `296.8cr
(`248.2cr) respectively.
EBITDA margin witnessed a contraction of 100bp yoy to 10.8% which in line
with our estimate of 11.1%. Margin decline is mainly attributable to higher raw
material prices, rose by ~190bp yoy to 70% as a proportion to sales, and
higher execution of low margin EPC projects. However, strong revenue growth
resulted into a decent PAT growth of 13.6% yoy to `101.7cr (`89.5cr) against
our estimates of no growth.
Thermax trails its fortune towards industrial capex, especially in sectors such as
metals, cement and oil and gas, which form its mainstream arena for offering
products and solutions in captive power and heating solutions. Therefore, the
current tough macro environment does not augur well for the company –
elevated interest rates remain a concern given the cascading impact on
investments and, thereby, lower order releases. This will directly impact the
company’s future growth trajectory. Hence, we have been Neutral on the stock
for the past few quarters. However, the stock price of Thermax has fallen
~28.1% in last three months leading a huge underperformance and also
factoring in some of the negatives. The stock is currently trading at reasonable
PE multiples of 12.1x and 10.4x FY2012E and FY2013E EPS, respectively.
We would like to hear the management commentary on future outlook and
get more details over the quarterly numbers post which we will revise our
estimates and recommendation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Thermax
Thermax announced its 2QFY2012 results which were well ahead of our and
street expectations. Top line grew by 19.4% yoy to `1,303cr (`1,092cr) which
was higher than our expectation of `1,168cr. The growth was driven by strong
execution of orders in both the Energy and Environment segment which posted
16% yoy growth to `1,035cr (`891.0cr) and 19.1% yoy growth to `296.8cr
(`248.2cr) respectively.
EBITDA margin witnessed a contraction of 100bp yoy to 10.8% which in line
with our estimate of 11.1%. Margin decline is mainly attributable to higher raw
material prices, rose by ~190bp yoy to 70% as a proportion to sales, and
higher execution of low margin EPC projects. However, strong revenue growth
resulted into a decent PAT growth of 13.6% yoy to `101.7cr (`89.5cr) against
our estimates of no growth.
Thermax trails its fortune towards industrial capex, especially in sectors such as
metals, cement and oil and gas, which form its mainstream arena for offering
products and solutions in captive power and heating solutions. Therefore, the
current tough macro environment does not augur well for the company –
elevated interest rates remain a concern given the cascading impact on
investments and, thereby, lower order releases. This will directly impact the
company’s future growth trajectory. Hence, we have been Neutral on the stock
for the past few quarters. However, the stock price of Thermax has fallen
~28.1% in last three months leading a huge underperformance and also
factoring in some of the negatives. The stock is currently trading at reasonable
PE multiples of 12.1x and 10.4x FY2012E and FY2013E EPS, respectively.
We would like to hear the management commentary on future outlook and
get more details over the quarterly numbers post which we will revise our
estimates and recommendation.
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