Thermax stock hits new high, up 4% on securing order worth of Rs 513 crore

Thermax, in an exchange filing, said Thermax Babcock & Wilcox Energy Solutions Limited, a wholly-owned subsidiary of the company, has concluded an order of Rs 513 crore for supply of 2X 550 TPH boiler

Shares of Thermax hit a new high of Rs 5,835, gaining 4 per cent on the BSE in Monday’s intra-day trade after the company said the Group has secured an order valued at Rs 513 crore from a leading industrial conglomerate.

Thermax Babcock & Wilcox Energy Solutions Limited (TBWES), a wholly-owned subsidiary of the company, has concluded an order of Rs 513 crore for supply of 2X 550 TPH boiler, Thermax said in a press release.

The company won the order from Jindal Energy Botswana Pty Ltd and the scope involves Design, Engineering, Manufacturing, Testing, Supply, Supervision (of Erection, Pre commissioning, Commissioning) & Performance Testing of 2 X 550 TPH CFBC boiler. This order will support the development of the first phase i.e. the 300 MW power station being established by the customer and will be executed in 23 months, Thermax said.

The order win is a much needed big size order for the company as it will propel the order backlog of the company (Rs 10,111 crore as of Q4FY24) and increase the revenue growth visibility over the medium term, ICICI Securities said in a note.

Thermax is a leading company in the energy and environment space and a trusted partner in energy transition. Thermax's extensive portfolio includes clean air, clean energy, clean water and chemical solutions.

TBWES provides equipment and solutions for generating steam for process and power through the combustion of various solid, liquid and gaseous fuels, as well as through heat recovery from turbine/engine exhaust and (waste) heat recovery from industrial processes. TBWES also offers heaters for various applications in the chemical, petrochemical and refinery segments. Its services arm offers renovation and modernisation solutions for old boilers and heaters.

Thus far in the calendar year 2024, Thermax has outperformed the market by surging 89 per cent. In comparison, the BSE Sensex rallied nearly 11 per cent.

Thermax is expected to benefit from India’s transition to green energy as it has many offerings in the space and also continues making investments. Future prospects in biomass, waste heat recovery (WHR), and water desalination also remain strong. But the current orderbook of Rs 10,111 crore (1.1x TTM revenue) is soft and company trades at premium multiples of 76x/63x its FY25/26 EPS, Sharekhan said in its Q1 result update.

The orderbook is soft due to absence of large orders. Company hopes to see some large order inflow in 1HFY25. Some sectors witnessed a slowdown in orderbook activity due to elections.

Industries such as steel and cement are undergoing capacity expansion, which bodes well for Thermax. Further, the government’s Union Budget announcement for infrastructure and development and the PLI package will support demand in the coming quarters.

Management commentary on the inquiry pipeline remains positive for smaller orders across food processing, chemicals, and pharmaceuticals in domestic markets, including large charges from oil and gas, FGD, and chemical. Management highlighted big-order opportunities in power, waste heat recovery in cement and steel sectors, both domestic and export markets. Thermax is also contemplating opportunities across newer and green technologies, which will provide the next leg of growth, the Sharekhan note stated.