Thermax is a leading player in the chemical, energy, and environmental solutions sector, the company specializes in providing cutting-edge technologies that promote sustainability and energy efficiency. Their offerings include absorption chillers, boilers, pumps, solar panels, and other advanced systems designed to meet the growing demand for eco-friendly solutions.
With a strong focus on innovation, the company helps industries reduce energy consumption, lower carbon footprints, and enhance operational efficiency. As the global focus shifts towards sustainable energy practices, the potential for growth in this sector is immense.
The company’s diverse range of solutions caters to various industries, including manufacturing, HVAC, and renewable energy, positioning it for significant growth as businesses worldwide embrace green technologies to meet environmental and regulatory goals.
Recent Fall of more than 20%
Thermax’s stock price has corrected significantly from ₹5,719 to ₹4,311 falling 24% within a month, driven by a weaker-than-expected second-quarter performance. The company reported a miss in EBITDA, which impacted investor sentiment.
Additionally, the revenue also dipped in the chemical segment due to delayed inventory delivery. This sharp decline reflects market concerns over profitability despite Thermax’s strong position in energy and environmental solutions.
Future Scope
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.
Guidance by Jefferies
According to the note, industrial infrastructure margins, which had been hurt by cost overruns in the first quarter, steadied and recovered to 7.5%. According to the brokerage, there is additional potential from new mining projects and sustainable execution tactics.
Thermax’s positioning is further strengthened by the green solutions division due to its high EBIT margins and operational efficiency. According to Jefferies, the revenue of the chemical sector has taken a hit primarily due to delayed inventory delivery, however, this is anticipated to improve in the upcoming quarters.
The brokerage also highlighted Thermax’s dominance in the industrial and clean energy sectors. Despite being classified as a medium-term opportunity by Jefferies, green hydrogen is viewed as a viable growth avenue.
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.
According to the brokerage the stock is to trade at a premium valuation, believes Jefferies, supported by a 28% earnings per share compound annual growth rate projected over fiscal 2024 to 2027.
Target Given by Jefferies
The brokerage has given a BUY rating on the stock with a price target of Rs. 6,100 which is close to 41% higher from its current market price.
Conclusion
Based on the brokerage Thermax Limited is not overvalued. Despite a recent 24% stock price correction, Jefferies maintains a BUY rating with a target price of Rs. 6,100, representing a 41% upside.
The company’s strong positioning in green solutions, robust order book, and projected 28% EPS CAGR from 2024-2027 suggest significant growth potential. Its diverse portfolio in energy and environmental technologies positions Thermax favorably in the evolving sustainable solutions market.
Written By: Dipangshu Kundu
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