Mehabe score: 2 G Factor: 3 Piotski Score: 8 The stock has a rating SELL. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 8.
Description
Thermax Limited offers solutions to energy, environment and chemical sectors. The Company’s portfolio includes boilers and heaters, absorption chillers/ heat pumps, power plants, solar equipment, air pollution control equipment/system, water and waste recycle plant, ion exchange resins and performance chemicals and related services. #
Main Points
Energy Segment (75% of revenues) #
The company’s energy segment comprises Process Heating, Absorption Cooling and Heating, Boiler and Heater and Power (EPC and Solar) businesses and related services. It is among the leaders in vapor absorption cooling and heating systems, with its chillers used worldwide for industrial refrigeration, air conditioning, process cooling and heating.
The company has domain experience in setting up captive power, cogeneration and trigeneration plants on an EPC basis, with an installed base of more than 3,300 MW.Site:THERMAXMain Symbol:THERMAX
Stock trades at 1386.0, below its 50dma 1427.52. However it is trading above its 200dma 1248.03. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 1427.52.
The 52 week high is at 1577.55 and the 52week low is at 703.95
Price Chart
P/E Chart
Sales and Margin
Strengths
– is almost debt free.
– has been maintaining a healthy dividend payout of 33.16%
Weakness
– Stock is trading at 5.08 times its book value
-The company has delivered a poor sales growth of -1.41% over past five years.
– has a low return on equity of 9.17% for last 3 years.
-Promoter holding has decreased over last 3 years: -3.60%
Competition
– The industry trades at a mean P/E of 24.1x. GMM Pfaudler trades at the industry’s max P/E of 93.28x. THERMAX trades at a P/E of 67.3x
– Industry’s mean G-Factor is 3.4 while the mean Piotski score is 8.0. THERMAX has a G-Factor of 3 and Piotski scoreof 8.
– Average 1 month return for industry is -0.2%. The max 1- month return was given by Bharat Dynamics: a return of 6.73 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 1575.0 cr compared to Rs 1323.0 cr for period ended Mar 2020, a rise of 19.0%
Operating Profits reported at Rs 140.0 cr for period ended Mar 2021 vis-vis 64.0 for period ended Mar 2020 .
Operating Margins expanded 405.1 bps for period ended Mar 2021 vis-vis Mar 2020 .
The EPS for Mar 2021 was Rs 9.01 compared to Rs 6.99 for previous quarter ended Dec 2020 and Rs 3.28 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 4791.0 cr for period ended Mar 2021 vis-vis sales of Rs 5731.0 cr for the period ended Mar 2020, a fall of 19.6%. The 3 year sales cagr stood at 2.4%.
Net Profit reported at Rs 207.0 cr for period ended Mar 2021 vis-vis sales of Rs 212.0 cr for the period ended Mar 2020, falling 2.4%.
Company reported a poor Net Profit CAGR of -3.7% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 769.0 cr for period ended Mar 2021 vis-vis Rs 326.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 8.0% compared to 9.0% over the last 3 Years. – The stock has given a return of 90% on a 1 Year basis vis-vis a return of 6% over the last 3 Years. – The compounded sales growth on a TTM bassis is -16% vis-vis a compounded sales growth of 2% over the last 3 Years. – The compounded profit growth on a TTM basis is 17% vis-vis a compounded profit growth of 2% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 12.73% vis-vis 12.45% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 5.35% vis-vis 5.48% for Mar 2021
Conclusion
– is almost debt free.
– has been maintaining a healthy dividend payout of 33.16% – Stock is trading at 5.08 times its book value
-The company has delivered a poor sales growth of -1.41% over past five years.
– has a low return on equity of 9.17% for last 3 years.
-Promoter holding has decreased over last 3 years: -3.60%
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 1427.52 and is trading at 1386.0. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
