Company Report | Q1FY12 Result Update

LONG TERM INVESTMENT CALL

25 July 2011 Industry CMP (INR) Target (INR) Upside / Downside (%) 52 week High/Low (INR) Market Cap (INR BN) 3M Avg. Volume (000s) P/E (FY12e) Shareholding Pattern (%)
Non Institutions 15%

Hold

Capital Goods 600 648 8 930/536 72 128 17x

Q1FY12 Result Highlights Thermax Ltd reported revenues of INR 10,444 mn for the quarter, which was up 32%, YoY. Revenues were above Unicon estimates. The growth was primarily due to improved execution in the quarter especially in the energy segment which comprises 77% of the business. EBITDA for the quarter was INR 1,137 mn, which was up 18%, YoY. It was slightly above Unicon estimates. EBITDA margin at 10.9% saw a fall of 127 bps as compared to last year. This was primarily due to rising raw material costs. Raw material as a percentage of sales increased from 62% in Q1FY11 to 66% in Q1FY12. PAT for the quarter was INR 799 mn, which was up 21%, YoY. PAT margin at 7.6% for the quarter saw a fall of 73 bps. PAT was above Unicon estimates. On the segmental front, Energy division has recorded 32% YoY growth

Institutions 23%

Promoters 62%

Stock Performance
900

to INR 8 bn and Environmental division has shown a growth of 19% YoY to INR 2.6 bn. Order Book

700

500

During the quarter end, the company had an aggregate order book of INR 58.8 bn compared to INR 63.3 bn in Q1FY11, a decline of 7% but higher than Q4FY11 backlog of INR 56 bn. On a consolidated basis the
Jul Sep Nov Jan May Mar Jul

300

order book at the end of Q1FY12 stood at INR 68 bn.

Thermax

Nifty

Performance (%) 1 Month 2.9 5.9 3 Months -7.2 -2.0 1 Year -25.8 3.5
(INR Mn)

Outlook & Valuation The management has stated that negative sentiment in the domestic markets due to high interest rates and inflation has resulted in a slowdown in the economic activity and hence resulted in lower order inflows. During the 15 months ending September 2012, Thermax will invest INR 4300 mn in new facilities and expansion of plants including INR 2000 mn on building the Thermax Babcock Wilcox plant at Shirwal where the joint venture company will make supercritical boilers. At CMP the stock trades at 17x its FY12E earnings estimate. We maintain Hold on the stock with a price target of INR 648.

Thmx NIFTY

Particulars Total Income EBIDTA Reported PAT

Actual 10,444 1,137 799

Estimates 9,385 1,057 713

* Source: Bloomberg, Unicon Research

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@unicon.in

Financials
(INR Mn)

Net Revenue Operating Exp. EBITDA EBITDA (%) Depreciation EBIT EBIT (%) Interest Other Income Tax Provision Tax Rate (%) PAT Extraordinary Items Reported PAT Reported PAT (%) EPS
Source: Company, Unicon Research

Q1FY12 10,444 9,307 1,137 10.9% 111 1,026 9.8% 4 147 371 31.7% 799 0 799 7.6% 6.7

Q4FY11 17,713 15,762 1,951 11.0% 116 1,835 10.4% 10 133 694 35.4% 1,264 0 1,264 7.1% 10.6

Q-o-Q -41% -41% -42% -13 bps -4% -44% -54 bps -62% 11% -47% -374 bps -37% NA -37% 51 bps -37%

Q1FY11 7,898 6,938 960 12.2% 106 854 10.8% 6 140 326 33.0% 662 0 662 8.4% 5.55

Y-o-Y 32% 34% 18% -127 bps 5% 20% -99 bps -33% 5% 14% -133 bps 21% NA 21% -73 bps 21%

Segment Snapshot
(INR Mn)

Segment Segment Revenue (a) Energy as % of sales (a) Environment as % of sales Less: Inter Segment Revenue as % of sales Total Segment Income Profit before Tax & Interest (a) Energy (b) Environment Total
Source: Company, Unicon Research

Q1FY12 8024 77% 2647 25% 227 2% 10444 810 313 1123

Q1FY11 6066 77% 2221 28% 388 5% 7898 680 269 949

YoY 32% 19%

32% 19% 16% 18%

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@unicon.in

Unicon Investment Ranking Methodology

Rating Return Range Buy >= 20% Accumulate 10% to 20% Hold -10% to 10% Reduce -10% to -20% Sell <= -20%

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Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@unicon.in