Published on 19/04/2017 1:02:29 PM | Source: Motilal Oswal Securities Ltd

Sell Thermax Ltd For Target Rs.781.00 - Motilal Oswal

Posted in Broking Firm Views - Long Term Report| #Capital Goods Sector #Broking Firm Views Report #Motilal Oswal #Thermax Ltd

* 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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