Brokerage See 20% Upside To This Mid Cap Heavy Electrical Equipment Stock, Suggests Buy

ICICI Direct in its recent report on Thermax Ltd, a Heavy Electrical Equipment company, for a target price of Rs 2,405 apiece. The brokerage sees potential gains of 20% if the stocks are bought at the Current Market Price.

Thermax Ltd (Thermax) offers integrated solutions in the areas of energy and environment - heating, cooling, power, water & waste management, air pollution control and chemicals. It operates in three key segments energy (~70.7% of FY22 revenue), environment segment (~20.6%) and chemicals segment (~8.7%) Thermax Ltd is a mid-cap Heavy Electrical Equipment company having a Market Capitalization of Rs 24,104.72 crore.

Stock Outlook & Returns

The Current Market Price (CMP) of Thermax Ltd stock is Rs 2,043 apiece, opened at Rs 2,030 apiece, gaining 1.62% from the previous close of Rs 2,010.40 apiece. The Current Market Price of the stock is Rs 756.05 above its 52-week low level and Rs 304 below its 52 week high level.

It hit the 52-week low on 11th August 2021 at Rs 1286.95 apiece, while the 52-week high it touched on 13th April 2022 at Rs 2347 apiece. Return on Equity (ROE) is 8.94%. TTM EPS is Rs 27.60. PE Ratio is 74.38. The dividend yield is 0.44 and the face value is Rs 2.

In the past 1 week, the share price slid down 1.32% and in the past 1 month it slid down 0.42%, respectively. Over the 1 year, it has gained 47.05% and 86.69% in the past 3 years, respectively. In the past 5 years, the shares of the company gained 125% returns.

Q1FY23 Results

Thermax reported mixed Q1FY23 results. Consolidated revenue at Rs 1654.5 crore, up 57.2% YoY, on better execution. EBITDA came in at Rs 96 crore, up 52.2% YoY, with margins at 5.8% impacted by higher commodity prices and freight cost. Adjusted PAT came in at Rs 58.9 crore, up 39% YoY. Order inflows for Q1FY23 were strong at Rs 2310 crore, up ~36% YoY.

Key triggers for future price performance

The brokerage said, "We expect revenue, EBITDA to grow at CAGR of ~29%, 42%, respectively, in FY22-24E amid margins gradually returning to normal levels. Recent broad based recovery in order inflows, strong order enquiry pipeline across industrial sectors likely to ensure decent order inflows, going forward. Controlled net working capital (NWC), strong balance sheet."

ICICI Direct Suggests Buy for a target price of Rs 2405 apiece

Strong balance sheet, prudent working capital management, recent technological tie-ups, are expected to support growth. "We remain long term positive and retain our BUY rating on the stock. We value Thermax at Rs 2405 i.e. 45x on FY24E EPS," the brokerage has said.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.