Add Thermax, target price Rs 2433: HDFC Securities

HDFC Securities has add call on Thermax with a target price of Rs 2433.The current market price of Thermax is Rs 2263.25.

Thermax, incorporated in the year 1980, is a Mid Cap company (having a market cap of Rs 27009.75 Crore) operating in Engineering sector.

Thermax key Products/Revenue Segments include Sale of services, Export Incentives, Scrap, Commission, Royalty Income and Other Operating Revenue for the year ending 31-Mar-2022.


Financials
For the quarter ended 31-12-2022, the company has reported a Consolidated Total Income of Rs 2091.57 Crore, down -1.11 % from last quarter Total Income of Rs 2115.09 Crore and up 27.23 % from last year same quarter Total Income of Rs 1643.90 Crore. Company has reported net profit after tax of Rs 126.66 Crore in latest quarter.

The company’s top management includes Mrs.Meher Pudumjee, Mr.Ashish Bhandari, Mr.Pheroz Pudumjee, Mr.Harsh Mariwala, Dr.Jairam Varadaraj, Mr.Nawshir Mirza, Ms.Rajani Kesari, Mr.S B Ravi Pandit. Company has SRBC & Co LLP as its auditors. As on 31-12-2022, the company has a total of 12 Crore shares outstanding.

Investment Rationale
High commodity prices and logistics costs in FY22 impacted the EBIT margins, dropping to 7.1% from pre-Covid levels of 9%+. However, with the cooling off of input prices, correction in logistics cost, higher revenue recognition for its two FGD projects and the international subsidiaries expecting to be profitable within a year, the EBIT margin on an overall level is expected to be between 8-9% in the medium term.

Promoter/FII Holdings
Promoters held 61.98 per cent stake in the company as of 31-Dec-2022, while FIIs owned 12.27 per cent, DIIs 15.35 per cent.