MOSL: THERMAX (Buy): In-line performance – strong execution offset by weak margin
Thermax: In-line performance – strong execution offset by weak margin
(TMX IN, Mkt Cap USD1.7b, CMP INR1018, TP INR1220, 20% Upside, Buy)
- Operating performance in-line: Sales grew 38.2% YoY to INR14.3b (our estimate: INR12.4b) in 2QFY19. Gross margin shrank 150bp YoY to 45.5%. EBIDTA increased 15.6% YoY to INR1.1b (in-line), with the margin contracting 150bp YoY to 7.7%. Net profit grew 31% YoY to INR0.8b (our estimate: INR0.7b), helped by higher other income (INR356m v/s INR236m in 2QFY18).
- S/A performance hurt by execution of lower-margin orders/higher cost: At the standalone (S/A) level, revenue grew 38% YoY to INR11.9b, helped by a pick-up in execution of projects in hand. Despite this, EBIDTA fell 3% YoY to INR836m, given (a) execution of lower-margin orders, (b) higher RM costs and (c) higher other expense (22.4% v/s 20.6% in 2QFY18) due to assembly costs incurred for the Dangote order, for which sales are yet to be booked. EBIDTA margin shrank 300bp YoY to 7.0%. Adj. PAT increased 22.0% YoY to INR693m.
- Healthy performance at subsidiaries: Subsidiary revenue grew by 41% YoY to INR2.4b and EBIDTA by 192% YoY to INR265m. EBIDTA margin stood at 11% (+600bp YoY) and PAT at INR52m (as against loss of 0.1m in 2QFY18).
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.