Thermax share price rises 94% in a year: 2 key reasons why Jefferies expects more than 16% gains for the stock

Thermax share price rises 94% in a year: 2 key reasons why Jefferies expects more than 16% gains for the stock
Thermax share price rises 94% in a year: 2 key reasons why Jefferies expects more than 16% gains for the stock

Stock Market Today: Thermax Ltd share price having risen more than 94% has almost doubled in a year. It is the improved earnings prospects that have been adding ti prospects as was evident from Q4 and FY24 performance reported by Thermax recently. Thermax order book during Q4 increased by 2,309 crore while for the year order inflows stood at 9,355 crore improving revenue visibility as order backlog was at 10,111 crore at the end of FY24. This has added to investors and analysts confidence.

Thermax had reported 20% revenue growth to 2,764 crore. while net profit grew 20% yoy to 188 crore during Q4.

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Jefferies expects more gains of 16% for the stock. Here are 2 key reasons’

Expected Margin improvement over FY24-27

The improving gross margins had helped Thermax’s FY24 Earnings before interest, tax. Depreciation and amortization (Ebitda) rise 33% YoY as revenue growth also improved 15% year on year

Analysts at Jefferies India private Limited in their resulting review report said that they think operating leverage should help, as management also expects order conversions ought to propel rather robust revenue growth. The Lower commodity prices, improving supply chain and operating leverage should drive margin improvement

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Valuations to be supportive as stock re-rates

Jefferies analysts say that Valuations should remain supported by earnings traction. Thermax is believed to be well-placed to be a leader for India in terms of clean water, clear air and clean energy solutions. Backed by the infrastructure spend, PLI linked incentive capex, industrial capex and housing recovery, over the next 12-24 months, capex growth is expected to sustain. Directionally, as revenues mirror the macro trends, analysts at Jefferies say that the margin outlook should sustain or improve and they see the stock re-rate. The revised price target by Jefferies stands at Rs5,480 (from Rs4,445 earlier, which reflects rollover to 55 times price rice to earnings as of Sept2026. This is at slight premium to the 10-year average that stands at 43 times price to earnings ratio on improved earnings outlook.

Disclaimer: The views and recommendations made above are those of individual analysts or brokering companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions

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