Neutral on Thermax - Motilal Oswal

Thermax (TMX IN; Mkt Cap USD1.7b, CMP Rs664, Neutral)

In 3QFY11 Thermax posted PAT of Rs1b, up 77% YoY, ahead of our estimates of Rs808m (up 43% YoY). Revenue rose by 66% YoY to Rs12b.

EBITDA margins were flat YoY at 11.8%. With a BTB ratio of 1.6x at the end of 9MFY11, we can expect robust execution by Thermax in 4QFY11 and FY12.

Order backlog at the Thermax Group at the end of 3QFY11 was Rs71b (up 27% YoY). Energy and environment segments in a ratio of 85% and 15%.

3QFY11 EBITDA margins was 11.8% (flat YoY) as material costs rose by 480bp YoY to 68% while other expenditure dropped 280bp YoY to 10.7%.

We have marginally raised our FY11 revenue and PAT estimates by 2.6 % and maintained our FY12 estimates. Thermax trades at 21x FY11E and 16x FY12E. Our EPS estimates for FY11, FY12 and FY13 are Rs31.5 (up 45% YoY), Rs41.1 (up 30% YoY) and Rs49.8 (up 21% YoY) respectively. We now estimate a revenue and PAT CAGR of 24% and 26% respectively over FY11-13. We rate the stock Neutral.

Source : Equity Bulls

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