Company Update : Thermax Ltd By Motilal Oswal Financial Services Ltd
Dismal performance on all fronts
* Thermax reported muted revenue at INR25.1b (+8% YoY) (MOFSL est. INR28.2b), led by 6%/3%/53%/19% YoY growth in the Industrial Products/Industrial Infra/Green Solutions/Chemical segments.
* Gross margin contracted ~40bp YoY/60bp QoQ to 44.2%, owing to an adverse mix in the Industrial Infra and Chemical segments. This, coupled with operating de-leverage, led to an EBITDA margin contraction of ~60bp YoY to 7.5%, while EBITDA at INR1.9b grew by a mere 1% YoY, far below our estimates.
* With a weak operational performance and lower other income (down 46% YoY), adj. PAT at INR1.1b declined 19% YoY, 34% below our estimates.
* Order inflow declined 8% YoY to INR23b, while the order book stood at INR113.8b, up 6% YoY.
* For 9MFY25, the company reported revenue/EBITDA/adj. PAT growth of 11%/16%/7%.
* Segmental margins: While the Industrial Product division did well on margins, margins in all other segments came below expectations. The Industrial Infra segment’s PBIT stood at 0.1%, which could have been due to write-offs related to projects and cost overruns. Green Solutions margins were also impacted QoQ and YoY. Additionally, the Chemical segment’s margins were impacted by product mix changes and forex volatility
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