Energy and environment solutions provider Thermax Ltd’s March quarter results threw up no surprises. Net revenue grew 62.9% sequentially and 28.6% year-on-year (y-o-y) to Rs 1,219.3 crore. Operating profit grew by 9% y-o-y to Rs 146.6 crore. But sequential growth was higher at 64%, given the faster pace of project execution. Environment segment revenue grew by 71% while that of the energy segment grew by 18% on a y-o-y basis.
Graphic: Yogesh Kumar/Mint
Thermax has contained costs as a percentage of sales in most areas including workforce and raw material costs. Purchase of traded goods was higher at 4% of sales, which analysts say is due to larger number of projects under execution compared with the year-ago period.
Around six months back, Thermax had settled a long-pending dispute with US-based Purolite Inc. It has written off Rs114.9 crore towards this payment in the quarter as an “extraordinary item”. Hence, the company has reported a net loss of around Rs15.7 crore. On business operations alone, Thermax posted a small 7% increase in net profit at around Rs99 crore.
Given that business operations for Thermax had picked up mainly in the last quarter of fiscal 2010, the company’s annual revenue was flat at Rs3,370 crore. Net profit at Rs256.3 crore was marginally lower than the previous fiscal, too.
However, fiscal 2010 saw a robust order book buildup to Rs5,300 crore, compared with Rs2,900 crore a year ago. The stock has risen steadily in the last few months on positive news, which include the company’s entry into high-end utility boilers. It has also announced a joint venture with Babcock and Wilcox Co. for manufacture of super-critical boilers, which are larger and where future growth potential exists in the power sector.
Thermax shares dipped by 2% on Tuesday to close at Rs666. Analysts estimate that fiscal 2011 should see 25% growth in revenue, with earnings per share of around Rs25. This implies a discount of 27 times, which leaves little room for appreciation from current levels.
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