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D i sma l o r d e r f l ows a c c e n t u a t e r i s k t o g r owt h…
Thermax delivered Q3FY12 results in line with our estimates. Reported
revenues stood at | 1269 crore vs. our expectation of | 1303 crore.
EBITDA margins at 10.7% were a tad above our estimate of 10.2%, even
though execution of EPC projects was high during Q3FY12.
Consequently, PAT declined 6% YoY to | 96 crore. However, a
dwindling standalone order book at | 5104 crore (20% de-growth) crore
poses a significant concern for FY13E revenue visibility, going forward.
We expect revenue and PAT to decline by 7% and 6%, respectively, for
FY13E on a YoY basis.
ƒ Dismal order backlog weakens revenue visibility…
Significant headwinds in the power sector coupled with a challenging
macro environment, led to a 40% YoY de-growth in order intake at | 590
crore. The standalone order book at | 5100 crore, registered a 20% YoY
decline. A book to bill at 1.0x, coupled with client side delays in
execution, poses significant challenges to revenue visibility for FY13E.
Hence, we have revised down our revenue estimates for FY12 and FY13
by 2% and 12%, respectively.
ƒ …may lead to change in company’s order bidding strategy
Though the company maintained an EBITDA margin of 10.7% for the
quarter, the sustenance of the same will come under attack if order
inflows do not pick up as the company may bid for low margin orders. As
such, we have factored the same in our estimates but perception risks will
persist. We expect Thermax to report an EBITDA margin of 11.3% for
FY13E.
V a l u a t i o n
Valuations at 16.8x FY13E EPS are demanding given the challenging
macro environment and dwindling revenue visibility. Hence, we have
assigned a lower P/E multiple of 13x (from 14x earlier) to arrive at a fair
value of | 401 (| 456 earlier) and rate the stock as SELL from HOLD
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
D i sma l o r d e r f l ows a c c e n t u a t e r i s k t o g r owt h…
Thermax delivered Q3FY12 results in line with our estimates. Reported
revenues stood at | 1269 crore vs. our expectation of | 1303 crore.
EBITDA margins at 10.7% were a tad above our estimate of 10.2%, even
though execution of EPC projects was high during Q3FY12.
Consequently, PAT declined 6% YoY to | 96 crore. However, a
dwindling standalone order book at | 5104 crore (20% de-growth) crore
poses a significant concern for FY13E revenue visibility, going forward.
We expect revenue and PAT to decline by 7% and 6%, respectively, for
FY13E on a YoY basis.
ƒ Dismal order backlog weakens revenue visibility…
Significant headwinds in the power sector coupled with a challenging
macro environment, led to a 40% YoY de-growth in order intake at | 590
crore. The standalone order book at | 5100 crore, registered a 20% YoY
decline. A book to bill at 1.0x, coupled with client side delays in
execution, poses significant challenges to revenue visibility for FY13E.
Hence, we have revised down our revenue estimates for FY12 and FY13
by 2% and 12%, respectively.
ƒ …may lead to change in company’s order bidding strategy
Though the company maintained an EBITDA margin of 10.7% for the
quarter, the sustenance of the same will come under attack if order
inflows do not pick up as the company may bid for low margin orders. As
such, we have factored the same in our estimates but perception risks will
persist. We expect Thermax to report an EBITDA margin of 11.3% for
FY13E.
V a l u a t i o n
Valuations at 16.8x FY13E EPS are demanding given the challenging
macro environment and dwindling revenue visibility. Hence, we have
assigned a lower P/E multiple of 13x (from 14x earlier) to arrive at a fair
value of | 401 (| 456 earlier) and rate the stock as SELL from HOLD
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