Thermax - Green Solutions To Drive Next Leg Of Growth: Prabhudas Lilladher

Prabhudas Lilladher Report

At the recent Thermax Fest held on December 15th, 2023, Thermax Ltd. showcased its innovative solutions across coal gasification, bio-CNG and biomass fuels, green hydrogen, renewable hybrid energy, construction chemicals, water, cooling and heating technologies, Thermal thermal heating, ventilation, and air conditioning and industrial asset management.

Although international manufacturing has not worked out as planned, there are some opportunities in Africa, Middle East and South East Asia. India, however, remains the fastest growing market for Thermax’s offerings and the company is looking to capitalise on opportunities arising out of government policies on carbon footprint reduction, green energy, wastewater treatment, etc.

Meanwhile, the chemicals business is unrelated to the energy transition theme, yet is expected to grow strongly over the next four-five years.

We believe Thermax is well placed to gain from increasing thrust on energy transition and de-carbonisation initiatives led by its-

1. sustainable green industrial solutions in bio-energy, heating and cooling, chemicals, and water,

2. technical expertise,

3. strong balance sheet and

4. prudent working capital management.

The stock is currently trading at a price-to-earning of 46.4 times/41.5 times FY25/26E.

We maintain our ‘Hold’ rating with a target price of Rs 2,771 (same as earlier), valuing it at a PE of 43 times Sep-25E (same as earlier).

We are positive on the long-term prospects of Thermax, while maintaining a neutral view for the near-term given steep valuations.

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