Result Update Thermax Company Reports

Result Update Thermax Company Reports

Thermax : Beats Estimate; Order Momentum to Continue 

Reco : Buy    Cmp : 568    Target :  650

Thermax⊨TMX) Q2FY13 performance was better than our and Street expectations on both net profit and order inflows. TMX maintained working capital cycle at 23 days, which is commendable as peers are reporting increase in working capital.

Q2 performance: Revenue at Rs 12 bn (down 9% YoY) vs. our est. Rs 11 bn; OPM of 10.2% (down 60 bps YoY) was lower than our est. of 11%. Net profit of Rs 911 mn (down 10% YoY) was higher than our est. of Rs 824 mn. Order inflow of Rs 13.2 bn was higher than our est. of Rs 12 bn with backlog at Rs 50 bn (flat QoQ).

Resurgence in captive power market: TMX management indicated poor grid reliability and better cost economics (Rs 4 vs. grid at Rs 6-7/kWh) are leading to rise in enquiries for smaller CPPs (5-25 MW) from Textiles, Food processing, Sugar and Cement sectors.