Dear All,
Forwarding you the Result Update on Thermax for 4QFY2011 with a Neutral recommendation.
Thermax delivered strong results for 4QFY2011, which were ahead of our estimates. The company posted 45.3% yoy top-line growth to `1,771cr on the back of strong execution. Led by strong top line, EBITDA and PAT also reported robust growth of 33.1% and 27.6%, respectively. Order intake growth was growth was flat at 2.5% to `1,528cr, while order backlog at the end of the quarter stood at `6,446cr, providing revenue visibility for the next 4–5 quarters. We remain Neutral on the stock.
Strong execution propelled revenue and profit: Led by strong execution, revenue for the quarter registered 45.3% yoy growth to `1,771cr, higher by 16.7% from our expectation of `1,517cr. The energy segment reported strong growth in revenue during the quarter. For FY2011, consolidated revenue grew by robust 58% yoy to `5,337cr (`3,370cr), while adj. PAT registered 49.6% yoy growth to `382cr (`256cr).
Outlook and valuation: Thermax has largely benefitted from industrial capex especially in sectors such as steel, cement and oil and gas, which form its mainstream arena for offering products and solutions in captive power and heating solutions. However, with continued elevation in interest rates amid high inflation, we expect increasing number of upcoming projects to be delayed, which may negatively impact order flows of companies such as Thermax. Notably, the company witnessed marked reduction in order inflows and delays in the decision-making process across the industry during the last two quarters of FY2011. The stock trades at attractive valuations of 15.8x and 13.6x FY2012E and FY2013E EPS, respectively. On the backdrop of the prevailing slowdown in the power sector coupled with macro concerns that weigh heavily on the stock, we continue to remain Neutral on the stock.
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If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com
With best regards,
Fundamental Advisory Desk
Angel Broking
Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.
Call : (91) (022) 39357600 Ext. 6865
Website : www.angelbroking.com
Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.
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