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Geojit Research Report
Thermax Ltd. 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 a robust revenue growth of 57% YoY during the quarter, led by strong execution in Energy (61% YoY) and Environment (62% YoY), while the Chemical segment grew by 22% YoY.
However, due to higher commodity prices and the execution of legacy FGD order in Environment segment, EBITDA margin fell by 19bps YoY to 5.8%.
Q1FY23 order book grew by 56% YoY (which is 1.4x TTM revenue), supported by 36% YoY growth in new orders.
The company expects a gradual recovery in the margin profile due to a favourable mix in the chemical segment and a correction in commodity prices.
TMX is currently trading at a P/E of 56x on a 1 year forward basis, which is well above its 1 year average P/E of 46x, implying limited room for further upside in the near term. Therefore, we revise our rating to REDUCE and TMX at a P/E of 43x on FY24E EPS with a TP of Rs. 2,178.
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