Thermax, Karur Vysya, Fine Organic, Aarti Industries, ABB India, Ami Organics Q4 Review: HDFC Securities

HDFC Securities Institutional Equities

Thermax - Robust beat; ordering awaited

Thermax Ltd. reported revenue/Ebitda/adjusted profit after tax of Rs 27.6/2.7/1.9 billion, beating our estimates by 8.6/16.6/11.3%. The Ebitda margin of 9.9% was better than our estimate of 9.2%. Order inflow during the quarter was muted at Rs 23.1 billion, taking the total order book to Rs 101.1 billion.

The lower-than-expected ordering is the result of postponement in a large bid order pipeline on the back of elections. Thermax expects a baseline quarterly run-rate of Rs 23-24 billion in ordering and large orders to add incrementally to this from Q1 FY25 as project closures happen in power/steel, etc. Thermax stands to benefit from the investment in clean energy, sustainability, decarbonisation, normalisation of the international market, ramping up of new products portfolio and impetus on cleaner air and water.

Thermax may cautiously relook at emerging UMMP opportunities as a large part of the portfolio focus is now on clean energy. We have recalibrated our estimates higher to factor in better growth and margins.

We maintain Buy on Thermax, with a target price of Rs 4,686 (54 times Mar-FY26E EPS).

Aarti Industries - On recovery path

We maintain our Add recommendation on Aarti Industries Ltd., with a target price of Rs 739/share. Aarti Industries' constant focus on capex and research and development will enable it to remain competitive and expand its customer base.

The toluene segment in India is mainly untapped and catered to through imports; Aarti Industries will benefit in the long term by entering this segment. Ebitda/adjusted profit after tax were 4/4% above our estimates, due to lower-than-expected raw material costs while revenue remains in line with our estimates.

Karur Vysya Bank - Deposit mobilisation key to sustaining earnings

Karur Vysya Bank Ltd.’s earnings beat estimates on the back of a strong operating performance and healthy growth on both sides of the balance sheet.

Loan growth (+16% YoY) was steady across segments, driven by MSME (+20% YoY), loan against property (+35% YoY), and personal loan (+120% YoY). Deposit growth kept pace with loan growth; however, the current account and savings account ratio deteriorated 114 bps QoQ to 30.4%, thus posing a trade-off between deposit granularity and steady-state growth.

We see limited room for return on asset reflation given the impending rise in cost of incremental deposits, potential rate cut impact starting H2 FY25 and sustained investments that are likely to reflect in an elevated opex-to-assets ratio.

We tweak our FY25E26E earnings estimates to factor in higher growth, partly offset by higher credit costs; we maintain Add with a revised target price of Rs 210 (1.4 times Mar-26 adjusted book value per share).

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