* During the quarter, Thermax through its step-down subsidiary, has agreed to acquire 100% stake in Barite Investments, Poland. The Polish company manufactures boilers and the acquisition would provide Thermax additional manufacturing capacity and help advance its business in the Eastern Europe region.
* Revenue is likely to register muted decline of 1% YoY, led by constrained execution environment prevailing in the energy segment and lower order book available for execution. Operating margin is expected to decline 130bp YoY to 12.1%.
* Ordering activity remains muted in a weak macro environment. We believe domestic orders have remained at the base level (INR5b-7b per quarter), as the company has not announced any meaningful order during the quarter.
* Maintain Sell.
Key issues to watch
* Demand environment in domestic and overseas markets.
* Sustainability of margins in energy (9.6% in 3QFY17) and environment (13.6% in 3QFY17) segments.
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