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Thermax: Strong performance continues…

Nov 12, 2002

Thermax Limited's September quarter numbers reiterate the company's comeback. It has posted a huge 48% rise in turnover during the quarter and seen an encouraging expansion in its operating margins. Higher tax provision has pruned bottomline growth to 24% YoY.

(Rs m)2QFY022QFY03Change1HFY021HFY03Change
Gross Sales (incl. Excise duty)9671,43047.9%1,8032,44435.5%
Other Income 12149-59.9%175110-37.0%
Expenditure9761,33636.9%1,8462,33426.5%
Operating Profit (EBDIT)-994--43109-
Operating Profit Margin (%)-1.0%6.6% -2.4%4.5% 
Interest 72-78.9%143-76.2%
Depreciation2923-20.9%5952-11.5%
Profit before Tax7611955.9%60165175.5%
Tax-638--643-
Extraordinary items-28-15--28-29-
Profit after Tax/(Loss)536623.6%3793152.0%
Net profit margin (%)5.5%4.6% 2.0%3.8% 
No. of Shares 23.323.8 23.323.8 
Diluted Earnings per share*9.011.1 3.17.8 
P/E Ratio 11.4  16.1 
*(annualised)      

As a result of the bouyant performance, Thermax ended the first half of FY03 with a 36% topline and a huge 152% bottomline growth YoY. With this, the company continues on its turnaround path. Thermax had posted a loss of Rs 132 m in FY01. FY02 was a better year for the company, where it earned Rs 240 m as net profit (helped by extraordinary income from sale of assets and businesses).

Segmental snapshot
% contribution to revenues2QFY031HFY03FY02
Energy67.7%69.3%61.2%
Environment32.3%30.7%38.8%
% contribution to PBIT   
Energy68.4%63.6%49.0%
Environment31.6%36.4%51.0%
PBIT earned per segment   
Energy9.1%6.9%8.4%
Environment8.8%8.9%13.8%

The company's order book position speaks volumes about the future growth prospects. The order backlog as on June 30, 2002 stood at Rs 2,060 m, 83% higher than the order backlog in the corresponding period last year. Based on this, the company has already indicated that it will finish FY03 with around 20% growth in topline (YoY).

Cost break-up
(Rs m)2QFY022QFY03Change1HFY021HFY03Change
Material costs55187358.5%1,0261,51547.6%
Staff costs169141-16.8%306269-12.1%
Other expenditure25632125.7%5135507.2%
Total expenditure9761,33636.9%1,8462,33426.5%

At the current price of Rs 126, the stock trades at 16.4x annualised 1HFY03 earnings. The company's second half of the year has traditionally been stronger than the first half. Assuming that the company earns the same net margins as FY02 (5.8% of net sales), then the valuations stand at 10.4x FY03E expected earnings.

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