Please refer to important disclosures at the end of this report 1 Quarterly highlights (Standalone) ( ` cr) 4QFY13 4QFY12 % chg (yoy) 3QFY13 % chg (qoq) Revenue 1,468 1,687 (13.0) 1,047 40.3 EBITDA 167 185 (9.7) 112 49.7 EBITDA margin (%) 11.4 11.0 41bp 10.7 72bp PAT 115 130 (11.2) 76 51.4 Source: Comp any, Angel Research For 4QFY2013, Thermax’s top-line performance was below our estimates with revenue coming in at `1,468cr, down 13.0% yoy (due to lower order book). The Energy segment as well as Environment segment witnessed a sharp decline in revenues (13.7% yoy decline to `1,139cr for energy segment and 16.9% yoydecline in environment segment to `350cr). However softening of commodityprices and cost control measures aided the company to post 41bp yoy expansion in margins to 11.4%. On the bottom-line front, net profit declined by 11.2% yoyto `115cr. Declining order book: Although order inflow for the quarter grew by robust ~49% yoy to `1,366cr on a consolidated basis (aided by a lower base), order visibility continu es to remain key concern after 6.0% sequential de-growth in order book to `4,878cr (1.0x its trailing 4 quarters revenue). The management commentary indicated that order enquiries in power, cement and steel sector continue to be muted. Thermax- BW JV to weigh on the consolidated profits: The Company’s super- critical boiler plant is nearly completed. However, securing orders is expected to be difficult as the slowdown in investments has led to lower orders and higher competitive intensit y. Hence, the company is expected to incur losses ( `100cr plus) from fixed cost and interest. Outlook and valuation: Thermax remains one of the most expensive stocks in our coverage universe trading at 18.0x FY2015 EPS estimates. Amid a weakening order inflow and working capital outlook, we expect Thermax’s return ratios to continue to deteriorate. We also expect Thermax- BW JV to weigh on the consolidated profits going forward as its utilization remains muted. Hence, we maintain our Neutral rating on the stock. Key financial s (Consolid ated) Y/E March ( ` cr) FY2012 FY2013E FY2014E FY2015E Net Sales 6,091 5,492 5,780 6,430 % chg 14.1 (9.8) 5.2 11.2 Net Profit 404 321 355 393 % chg 5.7 (20.4) 10.6 10.7 EBITDA (%) 9.7 9.2 9.5 9.6 EPS ( ` ) 33.9 27.0 29.8 33.0 P/E (x) 17.5 22.0 19.9 18.0 P/BV (x) 4.3 3.8 3.4 2.9 RoE (%) 27.4 18.4 17.9 17.4 RoCE (%) 30.8 21.2 20.4 20.3 EV/Sales (x) 1.0 1.0 0.9 1.0 EV/EBITDA (x) 10.5 12.6 11.4 10.0 Source: Comp any, Angel ResearchNEUTRAL CMP `594 Target Price -Investment Period - Stock Info Sector Net Debt ( `cr) ( 676) Bloomberg Code TMX@IN Shareholding Pattern (%) Promoters 62.0 MF / Banks / Indian Fls 10.5 FII / NRIs / OCBs 13.7 Indian Public / Others 13.8 Abs. (%) 3m 1yr 3yr Sensex 0.2 22.8 19.6 Thermax 3. 2 36. 6 ( 12. 7) Capital Goods Market Cap ( `cr) 7,076 Beta 0. 9 52 Week High / Low 684/424 Avg. Daily Volume 13,047 Face Value ( `) 2 BSE Sensex 19,674 Nif ty 5,967 Reuters Code THMX.BO Amit Patil 022-39357800 Ext: 6839 [email protected]Thermax Performance Highlights 4QFY2013 Result Update | Capital Goods May 23, 2013
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Disclosure of Interest Statement Thermax
1. Analyst ownership of the stock No
2. Angel and its Group companies ownership of the stock No
3. Angel and its Group companies' Directors ownership of the stock No
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