MOSL: THERMAX (Upgrade to Neutral)-Demand recovery under way
​Thermax: Demand recovery under way
(TMX IN, Mkt Cap USD1.6b, CMP INR877, TP INR830, 5% Downside, Upgrade to Neutral)
- Operational results impacted by GST-related dispatch issues: Thermax's (TMX) operating performance in 1QFY18 at standalone level was below expectations. Sales declined 10% YoY to INR7.1b (est. of INR8.8b), impacted by a weak opening order book (INR36.2b in 4QFY17), GST-led dispatch issues (INR800m), and exports (INR300m) getting impacted by malware attack at the JNPT port. Gross margin shrunk 230bp YoY to 48.3%. EBITDA declined 32% YoY to INR0.4b (est. of INR0.9b), impacted by weak execution and adverse revenue mix. Operating margin shrunk 210bp YoY to 6.0% (est. of 10.0%). Adj. net profit declined 28% YoY to INR0.3b (est. of INR0.6b).
- Subsidiaries report robust performance: Subsidiaries' performance improved strongly, despite decline in revenues. In 1QFY18, subsidiary revenue stood at INR1.6b (-16% YoY), EBIDTA at INR292m (+75% YoY), operating margin at 18.4% (+956bp YoY) and adj. PAT at INR82m (+119% YoY). At consolidated level, TMX's revenue stood at INR8.8b (-11% YoY), impacted by sluggish domestic and overseas market conditions. EBIDTA stood at INR721m (-10.3% YoY), with the margin at 8.3% (flat YoY). Adj. PAT declined 17% YoY to INR406m.
Thermax is engaged in the manufacture and development of a range of products and solutions in heating, cooling and power generation. In addition, Co. is engaged in the provision of water treatment, waste management and air pollution controlling services and the manufacture of related fuel and water chemicals. Co., through its subsidiaries, is engaged in the manufacture and sale of industrial boilers suitable for various fuels, CFBC boilers for power plants; painting equipment; measuring, checking and pressure instruments; process control and regulating instruments; and provision of lease, hire purchase, bill discounting and other finance related services.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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