Thermax Ltd. has posted a net profit of Rs 71 m for the quarter ended June 30, 2003 (up 165% YoY). However, the revenue growth engine seemed to have hit a speed breaker. The net sales dipped by 19% YoY, but due to decrease in the expenditure, the company managed to post an increase of 13% in operating income. The operating margins also improved marginally.
Operating Profit (EBDIT)
Operating Profit Margin (%)
Profit before Tax
Profit after Tax/(Loss)
Net profit margin (%)
No. of Shares
Diluted Earnings per share*
There is a 46% increase in order booking for the quarter as compared to the corresponding figure last year. As a result the order backlog of the company stands at Rs 2.3 bn (around 0.5x FY03 revenues)
The material cost came down drastically as compared to same quarter last year and overall decrease of around 19% helped company to improve its operating margins. The net profit got a further boost because of increase in other income (up 41%), decrease in interest cost (down 50%) and depreciation (down 22%).
Letís have a look at the segmental break-up of revenues.
The huge dip of around 24% in revenues from energy business remains the cause of worry. The trend may get carried to the next quarter as well, because this segment has failed to see any significant order flow. The PBIT margin of energy segment has improved marginally due to reduction in material and other costs. The revenues of environmental business came down by around 6% but what is more worrisome is the losses posted at PBIT level by this segment as compared to decent profits in the same quarter last year. The major contributor to the huge increase in the net profits is unallocable income. Company has not given any details about the break-up of unallocable income.
Gross total revenue
Though company expects most of its businesses to grow by 15% in FY04 but the environmental business profitability seems to be in doldrums. Moreover, the company has not been able to receive any major contract for cogen division (handling the power business of the company) so not much can be expected from that.
The company will see a new chairperson at the helm soon. This clears the air on succession issue for Thermax. The company reported strong FY03 numbers doubling net profits to Rs 482 m, backed by 16% topline growth. Thermax has already announced Rs 12 per share as dividend and also a bonus issue of 6% preference shares, in the same vein as HLL.
At the current price level of Rs 248, the stock trades at the P/E multiple of 20.6x annualised 1QFY04 earnings. Though the first quarter has raised some concerns, for engineering companies it cannot be taken as a benchmark of future performance.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407