14 May 2012
4QFY12 Results Update | Sector: Capital Goods
Equity Shares (m)
52-Week Range (INR)
1,6,12 Rel. Perf. (%)
M.Cap. (INR b)
M.Cap. (USD b)
Thermax: In-line performance amidst challenging environment; cutting estimates as headwinds building-up
4QFY12 operating performance in line:
TMX reported in-line 4QFY12 operational performance with standalone
revenues down 5% YoY, while PAT grew 3% YoY. Consolidated PAT grew 6% YoY in FY12 supported by positive
impact of Danstoker acquisition.
Order intake disappoints; second consecutive quarter with no large orders:
Order intake continues to be
disappointing at INR8.1b (down 40% YoY). Consolidated order-backlog declined 25% YoY to INR48b given
second consecutive quarter of no large order finalizations. Base orders from segments like cooling, heating,
chemicals, etc reported healthy growth; Power EPC was the most impacted.
Impressive EBITDA margins:
EBITDA margins improved 39bp YoY at 11%, and are impressive, in an environment
of continued increase in commodity prices / poor fixed absorption. We believe that if the macro environment
continues to remain volatile, TMX will possibly have to start compromising on margins to bag orders (as
market share / fixed costs are important priorities). TMX has taken various steps towards improving operational
excellence; while currency remains a key risk.
Cutting estimates on lowered order intake assumptions:
Management Guidance (FY13): Lower revenues YoY,
Improved order intake and maintaining margins at double digit (11% in FY12). We have cut our earnings
estimate by 13%/21% for FY13/14 driven by lower order intake assumptions. Maintain
price of INR361 based on 12x FY13E EPS.
(AgarwalS@MotilalOswal.com); +91 22 39820 5410
(Deepak.Narnolia@MotilalOswal.com); +91 22 3029 5126