Thermax Limited is a leading engineering solutions provider in the energy and environment sectors and is currently trading at a notable discount of 24% from its 52-week high of Rs. 5,835. Despite market volatility, the company demonstrates strong fundamentals with a 24.85% revenue CAGR, a healthy debt-equity ratio of 0.32x, investment of renewable energy of Rs. 700 crore, and robust Q2 FY25 performance showing 70% YOY growth in order booking to Rs. 11,593 crore, making it an attractive investment opportunity.
Stock movement:
With a market capitalization of Rs. 52,775.52 crores, the shares of Thermax Limited were trading at Rs. 4408.25 per equity share, up nearly around 1.51 percent from its previous day’s close price of Rs. 4373.90 The stock is down almost 23.92% from the 52-week high of Rs. 5,835
Business Highlights:
Thermax Limited demonstrates strong capabilities in industrial and environmental solutions, with notable projects across diverse sectors. The company has commissioned significant installations, including a biomass-fired boiler in Sri Lanka, waste heat recovery systems for a mushroom plant in Europe, and comprehensive water treatment facilities for oil refineries. The company’s industrial solutions focus on energy efficiency and environmental compliance.
The company shows also amazing growth in green and sustainable solutions, particularly in renewable energy projects. Thermax has expanded its portfolio with a 2 MWp solar project in Maharashtra and a 39 MW wind project in Tamil Nadu.
Additionally, its chemicals division is strengthening its presence internationally, establishing a new facility in Indonesia for essential water treatment and specialty chemicals.
Orderbook Status and Performance:
The Q2 order book shows diverse sector penetration, with mining leading at 32% market share, followed by sugar/distillery at 6% and paper/pulp at 7%. The company maintains a stable order base with strong enquiry inflow from steel, chemical, and F&B segments, while also seeing positive momentum in the biofuel sector.
The consolidated performance shows outstanding growth, with Industrial Infra showing an exceptional 167% YOY increase in Q2 order booking, reaching 1,748 units. The total order booking grew by 70% YOY to 3,353 units. The company’s overall order balance increased by 13% YOY to 11,593 units, reflecting robust business expansion.
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Future Outlooks:
Thermax Limited is expanding its renewable energy portfolio through FEPL (First Energy Private Limited), targeting 600 MW capacity in the near term and aiming to reach 1 GW by FY27-28 with an initial investment approval of Rs. 700 crores.
In the hydrogen space, Thermax plans to invest around Rs. 100 crores over the next 18 months to develop products and set up manufacturing capabilities for 100-300 MW capacity. The company also expects to continue receiving production-based government incentives periodically over the next three years.
Recent quarter results and ratios:
Thermax Limited’s revenue has increased from Rs. 2,302 crore in Q2 FY24 to Rs. 2,184 crore in Q2 FY25, which has grown by 13.47 percent YOY. As compared to Q1 FY25, the revenue has increased by 19.6 percent, from Rs. 2,184 crore.
The net profit of Therma Limited has also grown by 24.53 percent, from Rs. 159 crore in Q2 FY24 to Rs. 198 crore in Q2 FY25, and grew by 81.65 percent QoQ from Rs. 109 crore in Q1 FY25.
Thermax Limited’s revenue and net profit have grown at a CAGR of 24.85 percent and 45.91 percent, respectively, over the last three years.
In terms of return ratios, the company’s ROCE and ROE should be 16.9 percent and 14.2 percent, respectively. The debt-to-equity ratio of the company is to be 0.32x, which shows the company is almost debt-free. Thermax Limited’s EPS is to be Rs. 62.2.
Shareholding pattern:
In September 2024, Thermax Limited had a majority stake held by the promoters at 61.99 percent, foreign institutional investors at 15.38 percent, domestic institutional investors at 12.72 percent, the public at 4.45 percent, and the others at 5.47 percent.
Company Overview:
Thermax Limited is a prominent engineering company based in Pune, India, specializing in sustainable solutions for energy and the environment. Established in 1966 as Wanson India by A.S. Bhathena, the company was renamed Thermax in 1980. It has since evolved into a leading player in various sectors, including heating, cooling, power generation, water treatment, air pollution control, and specialty chemicals.
Written By – Nikhil Naik
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