Reduce Thermax - Result Update - Kotak

The deceleration in the revenue growth of Thermax was largely expected as the order backlog has been on a declining trend.

- Order backlog (Standalone) is down 25% yoy to Rs 42.3 bn, thus imparting a revenue visibility of 10 months based on trailing four quarters revenues.

- In view of the weak order intake in FY12, we project revenue and earnings to decline in FY13 by 7% and 11% respectively.

- We had previously recommended "Reduce at Rs 522" on the stock. Since then the stock price has corrected significantly. Valuations are still not supportive at current levels and there is scope for further contraction. We maintain Reduce with a target price of Rs 450.

Source : Equity Bulls

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