MOSL: THERMAX (Neutral)-Order inflow strong but inadequate to fuel revenue growth
THERMAX: Order inflow strong but inadequate to fuel revenue growth
(TMX IN, Mkt Cap USD1.8b, CMP INR1069, TP INR1170, 9% Upside, Neutral)
- Operating performance in line: 2QFY20 sales grew 12.5% YoY to INR16b (in-line). EBIDTA was up 18.4% YoY to INR1.3b (6% above est.), while EBITDA margin improved 40bp YoY to 8.1%. On account of higher depreciation and lower other income, PBT growth was muted at 1.8% to INR1.2b (in-line). Write-down of INR700m on account of DTA (in light of the new corporate tax rates) led to effective tax rate of 78.7%. Thus, adj. PAT declined 62.3% to INR257m (72% below est.).
- 1HFY20 revenue/EBITDA/PBT increased 22%/28%/8% YoY, while Adj. PAT declined 25% YoY.
- Segmental performance: Energy segment grew 17% YoY to INR13.4b, supported by healthy execution. However, EBIT margins declined 100bp YoY to 6.2%. Environmental segment revenue declined 11% YoY to INR1.5b with EBIT margins at 4.7% (+190bp YoY). Chemical segment revenues came in at INR1.1b (+6% YoY) with EBIT margins at 17.9% (+290bp YoY).
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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