Add Thermax Ltd For Target Rs.1,550 - Yes Securities
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Result Highlights
* Revenue grew 19% yoy to Rs15.7 bn led by Energy segment which grew by 51% yoy while Environmental sales and Chemical segmental revenues grew by 13% and 24% respectively.
* EBITDA more than doubled to Rs1.4 bn and EBITDA margin expanded to 8.9%. The Company has passed through some cost in FY22 to offset the rising commodity prices. May see cost pressure in Q1 FY22.
* EBIT margin for Energy/Environment/Chemical came in at 9.3%/6.6%/18.5% for the quarter. The chemical segment reported the EBIT margin of 24% in FY21 which looks like sustained level going ahead due to its rising demand.
* The company had an order balance of Rs52.27 bn flat YoY. Order inflows for the quarter stood at Rs14.9 bn of which Energy stood at Rs11.7 bn, Environment at Rs2.04 bn, and Chemical at Rs1.2 bn. Most of the orders came from cement, steel refining and petrochemicals segment in Q4 FY21. For FY21 overall the order book is very well spread across segments.
* Both overseas subsidiaries Danstoker & Plant in Indonesia are on track to recovery and well placed for growth.
Our view:
Company delivered robust performance during the quarter driven by strong performance across verticals. While the orderbook stood flat for the year new big orders are expected to kick in as COVID situation improves. The margins which have been under pressure due to rising commodity price are expected to stabilize as Company passes through the cost to end users in coming quarters.
Demand outlook stays positive in segments like cement, oil and gas and specialty chemicals. The EBIT margins of chemicals likely to sustain at ~25% levels due to its rising demand. We have marginally increased our estimates for FY22/23 to factor in strong Q4 performance and improved outlook. We retain our ADD rating on the stock for target price of Rs. 1,550 (40x FY23e EPS).
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