Thermax - March 2013 Results Preview - Motilal Oswal

- EBITDA margin over 9MFY13 has declined by only 40bp despite a 11% decline in sales (partially benefiting from softening commodity prices) despite poor fixed cost absorption. We expect EBITDA margin of 10.4% (down 60bp) during 4QFY13E.

- Order intake has picked up from the lows and is sustaining at ~INR12-14b per quarter (consolidated). Over 9MFY13, order inflow is up 13% YoY. Management had mentioned an increase in order enquiries and improving signs of ordering activity.

- Consolidated PAT has been impacted by losses in subsidiaries (down 25% YoY over 9MFY13). However, losses in subsidiaries have been declining from the peak of INR147m in 1QFY13. Subsidiaries are making losses largely due to cost overruns in Meenakhshi project and losses in Chinese subsidiaries etc. We expect profitability in subsidiaries to further show an improvement given Meenakhshi project is largely over and Danstoker had reported profits during the last quarter.

Source : Equity Bulls

Keywords