This Engineering Stock Rallied By 230.03% In 3-Years, Shows Potential Upside Of 23.4%

The Share price of Thermax Limited has grown massively by 230.03% in three years. Sharekhan, sees a potential upside of nearly 23.4% from this engineering company stock. The brokerage has shared a target price of Rs 2,790 per share. Given below are the details.

In the analyst coverage report, the brokerage mentioned that they met the CFO of the company and discussed about future plans, especially in terms of green energy. Thermax has a stronghold in green energy in sectors such as metals, cement, chemicals, etc, places it in a strong position to grab the opportunity of rising green energy adoption in these industries over the coming decade. The current order backlog has ~75% of green-energy orders. It has transitioned from capex to a solution-based opex model in the solar and bio-mass segments through its subsidiaries - FEPL and TOESL.

The company has a robust order book, as it gets orders from small to mid-sized companies. Its order backlog stood at Rs. 9,859 crore at the end of Q3FY23, while order intake declined 10% y-o-y to Rs. 2,204 crore. Order inflow had a healthy mix of orders from diverse industry sectors such as metals and steel (10%), refinery and petrochemical (10%), sugar/distillery (12%), fertilizer (15%), food and beverages (7%), and transportation (8%) among others.

According to the report, "Thermax is expected to benefit from India's transition to green energy as it has many offerings in the space. Further, its foray into the solar and biomass opex model would diversify its revenue base. International opportunities in biomass, waste heat recovery (WHR) and water desalination also remain strong. Given that robust financials and ample business opportunities, we expect Thermax to trade at a premium. In the long term, Thermax with its strong execution and technological capabilities in green energy and the wastewater industry should be able to deliver strong performance. Further, robust financials in terms of healthy cash balance and balance sheet give us confidence. Hence, we maintain a Buy rating on the stock with an unchanged price target of Rs. 2,790, valuing the stock on its September 2024E EPS."

About Thermax Ltd

Thermax Ltd is a mid cap company incorporated in 1966, headquartered in Pune, India. It manufactures equipment and machinery used to both produce and to conserve energy. Its business portfolio includes products for heating, cooling, water and waste management, and specialty chemicals. The company also designs, builds and commissions large boilers for steam and power generation, turnkey power plants, industrial and municipal wastewater treatment plants, waste heat recovery systems and air pollution control projects. In addition, Thermax produces steam and gas turbines and diesel gensets through a number of strategic alliances. It operates globally through 29 international offices and 14 manufacturing facilities - 10 of which are in India and 4 overseas.

The company has it footprints present in 88 countries and supports customers through an extensive sales & service network spread over Asia, South East Asia, Middle East, Africa, Europe and the Americas. Besides the group consists of 7 wholly owned domestic subsidiaries and 21 wholly owned overseas subsidiaries. The current market capitalisation is Rs 27,164.06 crore.

The latest stock price of Thermax Ltd is Rs 2279.70 per share, which is up by 0.99% over previous day's closing. Its 52-week high is at Rs 2,678.50 per share and 52-week low is at Rs 1,830.35 per share. In over 1 year the stock price rallied by nearly 11%, but in 3 years it grew massively by 230.03%.

Disclaimer:
The stock has been picked from the brokerage report of Sharekhan. Greynium Information Technologies and 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 consult with certified experts before making any investment decision.