Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Thermax announced its 2QFY2012 results, which were ahead of our and street
expectations. The company positively surprised on the top-line front, growing by
19.4% yoy `1,303cr, which was higher than our estimate of `1,168cr. Led by
strong top line, EBITDA and PAT also reported decent growth of 9.3% and 13.6%,
respectively. Future of the company is directly linked to the recovery of industrial
capex which is showing no visible signs of improvement leading to stiff headwinds
on the business front. Hence, we maintain Neutral on the stock.
Strong execution drives revenue and profit: For 2QFY2012, Thermax reported
revenue growth of 19.4% yoy to `1,303cr (`1,092cr), driven by strong execution.
EBITDA margin witnessed a contraction of 100bp yoy to 10.8%, which was in-line
with our estimate of 11.1%. The margin decline can mainly be attributed to higher
raw-material prices, which rose by ~190bp yoy to 70% as a proportion to sales,
and higher execution of low-margin EPC projects. However, strong revenue
growth resulted in decent PAT growth of 13.6% yoy to `101.7cr (`89.5cr), against
our estimates and street estimates of flat growth.
Outlook and valuation: At the CMP, the stock trades at very attractive valuations
of 12.6x and 11.7x FY2012E and FY2013E earnings, respectively (well below its
historic average of 19.0x one-year forward earnings). The stock has corrected
sharply by ~28% in the last three months, factoring in the negatives surmounting
the sector. A weakened business environment would lead to lower order inflows,
poor earnings growth and a stretched working capital cycle going ahead –
reversal of the company’s key strengths. Hence, we reduce our target P/E multiple
from 16.0x to 12.0x to factor in the same, thus arriving at a fair price of `437.
We maintain our Neutral view on the stock.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Thermax announced its 2QFY2012 results, which were ahead of our and street
expectations. The company positively surprised on the top-line front, growing by
19.4% yoy `1,303cr, which was higher than our estimate of `1,168cr. Led by
strong top line, EBITDA and PAT also reported decent growth of 9.3% and 13.6%,
respectively. Future of the company is directly linked to the recovery of industrial
capex which is showing no visible signs of improvement leading to stiff headwinds
on the business front. Hence, we maintain Neutral on the stock.
Strong execution drives revenue and profit: For 2QFY2012, Thermax reported
revenue growth of 19.4% yoy to `1,303cr (`1,092cr), driven by strong execution.
EBITDA margin witnessed a contraction of 100bp yoy to 10.8%, which was in-line
with our estimate of 11.1%. The margin decline can mainly be attributed to higher
raw-material prices, which rose by ~190bp yoy to 70% as a proportion to sales,
and higher execution of low-margin EPC projects. However, strong revenue
growth resulted in decent PAT growth of 13.6% yoy to `101.7cr (`89.5cr), against
our estimates and street estimates of flat growth.
Outlook and valuation: At the CMP, the stock trades at very attractive valuations
of 12.6x and 11.7x FY2012E and FY2013E earnings, respectively (well below its
historic average of 19.0x one-year forward earnings). The stock has corrected
sharply by ~28% in the last three months, factoring in the negatives surmounting
the sector. A weakened business environment would lead to lower order inflows,
poor earnings growth and a stretched working capital cycle going ahead –
reversal of the company’s key strengths. Hence, we reduce our target P/E multiple
from 16.0x to 12.0x to factor in the same, thus arriving at a fair price of `437.
We maintain our Neutral view on the stock.
No comments:
Post a Comment