Jefferies Maintains 'Buy' On Thermax, Cites Robust Orderbook, Strong Green Solutions Segment

Jefferies has maintained a 'buy' rating on Thermax Ltd., citing growth in order flows and a promising outlook. The target price has been revised to Rs 6,100, implying a 22% potential upside.

Despite a minor Ebitda miss for the second quarter of this fiscal, the brokerage is positive on Thermax's trajectory, driven by industrial infrastructure recovery and a resilient order book. The stock is to trade at a premium valuation, believes Jefferies, supported by a 28% earnings per share compound annual growth rate projected over fiscals 2024 to 2027.

Thermax reported a 70% year-on-year jump in order flows fueled by strong performance across industrial products and infrastructure, which together account for 87% of the company's revenue.

The company is also eyeing significant opportunities in refinery pipelines and medium-sized projects. Key contributions came from a sizeable mining project in Botswana and refinery pipelines set to convert by the first half of 2026.

Margins for industrial infrastructure stabilised, recovering to 7.5% after being impacted by cost overruns in the first quarter, as per the note. New mining projects and sustainable execution strategies provide further upside, according to the brokerage.

The green solutions segment continues to bolster Thermax's positioning, holds Jefferies, with strong Ebit margins and operational efficiencies. However, the chemicals segment faced temporary revenue weakness due to delayed inventory delivery, which is expected to normalise in the coming quarters.

The brokerage emphasises Thermax's leadership in clean energy and industrial segments. Green hydrogen is seen as a promising growth avenue, though Jefferies labels it as a medium-term opportunity.