1. s
Recommendation BUY
CMP 1038.60
Target Price 1145.00
ISIN: INE152A01029 JULY 30th
2015
THERMAX LIMITED
Result Update (PARENT BASIS): Q1 FY16
STOCK DETAILS
Sector Heavy Electrical Equipment
BSE Code 500411
Face Value 2.00
52wk. High / Low (Rs.) 1315.00/790.00
Volume (2wk. Avg ) 11000
Market Cap ( Rs in mn ) 123754.38
Annual Estimated Results (A*: Actual / E*: Estimated)
Years FY15A FY16E FY17E
Net Sales 46974.13 50732.06 55297.95
EBITDA 5808.48 6388.96 6905.79
Net Profit 3359.37 3712.19 3955.21
EPS 28.19 31.15 33.19
P/E 36.84 33.34 31.29
Shareholding Pattern (%)
1 Year Comparative Graph
THERMAX LTD BSE SENSEX
Highlights
Thermax Limited, a leading energy and environment
solutions provider, is one of the few companies in the
world that offers integrated innovative solutions in
the areas of heating, cooling, power, water and waste
management, air pollution control.
In the first quarter of fiscal 2015-16, Thermax posted
operating revenue of Rs. 10011.90 million, 19.27%
higher compared to Rs. 8394.09 million in the
corresponding quarter last year.
Net profit for the quarter increased by 48.96% to Rs.
616.78 million from Rs. 414.06 million, when
compared with the prior year period.
In Q1 FY16, EBIDTA is Rs. 1078.49 million as against
Rs. 768.26 million in the corresponding period of the
previous year, grew by 40.38%.
Profit before tax (PBT) at Rs. 919.42 million in Q1
FY16 compared to Rs. 589.06 million in Q1 FY15,
registered a growth of 56.08% y-o-y.
Earnings per Share for the company were Rs. 5.18
compared to Rs. 3.47 in Q1 FY15, registered a growth
of 48.96%.
Thermax signed an agreement to acquire 33% stake
in First Energy Private Limited, an alternative energy
solutions company.
The company’s order balance on June 30, 2015 stood
at Rs. 42750 million, down 18% from Rs. 52060
million for the corresponding quarter last year.
Thermax has decided to set up a new manufacturing
facility on the east coast of the country.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
COMPANY NAME (Rs.) Rs. in Mn. (Rs.) Ratio Ratio (%)
Thermax Ltd 1038.60 123754.38 28.19 36.84 5.46 350.00
Kalpataru Power Transmission Ltd 271.20 41618.50 10.79 25.13 1.96 75.00
ALSTOM India Ltd 830.00 55798.80 26.94 30.81 5.72 100.00
Crompton Greaves Ltd 178.25 111717.50 11.68 15.26 2.79 40.00

2. Company Profile
Thermax Limited, , a leading energy and environment solutions provider, and one of the few companies in the
world that offers integrated, innovative solutions in the areas of heating, cooling, power, water and waste
management, chemicals, air pollution control and chemicals. The sustainable solutions Thermax develops for
client companies are environment-friendly and enable efficient deployment of energy and water resources.
The company was Headquarter in Pune, India operate globally through 19 International offices, 12 Sales &
Service offices and 12 manufacturing facilities - 7 of which are in India and 5 overseas. The company’s presence
spans 75 countries across Asia Pacific, Africa and the Middle East, CIS countries, Europe, USA and South America.
The group consists of 5 domestic wholly owned subsidiaries, 16 overseas wholly owned subsidiaries and 2 joint
ventures. The company’s solutions specifically focus on heating equipment - using a variety of fuels, including
biomass, Absorption chillers - fired by waste heat or steam, Power and captive cogeneration plants, Waste heat
recovery units, Waste water management systems – pre-treatment, waste water treatment and chemical
conditioning of water, sewage effluent treatment and recycling, Air pollution control systems, Performance
improving chemicals and Solar based heating, cooling and power.
FINANCIAL HIGHLIGHTS (PARENT BASIS)
Q1 FY16
The Company has achieved a turnover of Rs. 10011.90 million for the 1st quarter of the financial year 2015-16 as
against Rs. 8394.09 million in the corresponding quarter of the previous year, grew by 19.27%. EBITDA of Rs.
1078.49 million in Q1 FY16, an increase of 40.38% against the corresponding period of last year. Net profit was
Rs. 616.78 million against Rs. 414.06 million in the corresponding quarter of the previous year, an increase of
48.96%. The company has reported an EPS of Rs. 5.18 for the 1st quarter as against an EPS of Rs. 3.47 in the
corresponding quarter of the previous year.
Months June-15 June-14 % Change
Net Sales 10011.90 8394.09 19.27
PAT 616.78 414.06 48.96
EPS 5.18 3.47 48.96
EBITDA 1078.49 768.26 40.38

3. Break Up of Expenditure:
Segment Revenue
Other Updates
The company’s order balance on June 30, 2015 stood at Rs. 42750 million, down 18% from Rs. 52060
million for the corresponding quarter last year.
Thermax signed an agreement to acquire 33% stake in First Energy Private Limited, an alternative energy
solutions company.
Thermax has decided to set up a new manufacturing facility on the east coast of the country. It has also
acquired land at Dahej, Gujarat for setting up a manufacturing facility for Chemical business.
RS. In Mn Q1 FY16 Q1 FY15
%
CHNG
Cost of materials consumed 6161.79 5030.59 22%
Purchases of stock-in-trade 251.13 208.87 20%
Employee benefits expense 1110.78 1027.31 8%
Depreciation &
amortisation expense
157.61 149.51 5%
Other expenses 1644.89 1631.81 1%

4. Financial Statements & Estimations (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance sheet as on March 31st, 2014-2017E
Thermax Ltd FY14A FY15A FY16E FY17E
SOURCES OF FUNDS
Shareholder's Funds
• Share Capital 238.31 238.31 238.31 238.31
• Reserves and Surplus 20011.60 22429.90 26142.12 30097.32
Total Net worth (A) 20249.91 22668.21 26380.43 30335.63
Non Current Liabilities
• Long term borrowing 6.00 7.20 7.92 8.55
• Deferred Tax Liabilities 136.40 0.00 0.00 0.00
• Other Long term liabilities 1593.20 461.60 406.21 365.59
Total Non Current liabilities (B) 1735.60 468.80 414.13 374.14
Current Liabilities
a) Short term borrowings 1887.10 310.30 263.76 232.10
b) Trade payables 8412.20 8634.60 8893.64 9071.51
c) Other Current liabilities 13874.00 13665.90 14349.20 14779.67
d) Short term Provisions 2379.70 2778.60 3112.03 3360.99
Total Current Liabilities (C) 26553.00 25389.40 26618.62 27444.28
Total Liabilities (A + B + C) 48538.51 48526.41 53413.17 58154.06
Non-Current Assets
Fixed Assets
i. Tangible Assets 6098.50 5838.01 6188.29 6497.71
ii. Intangible assets 305.70 255.10 267.86 283.93
iii. Capital Work in Progress 235.00 391.70 462.21 526.91
a) Sub Total Fixed Assets 6639.20 6484.81 6918.35 7308.55
b) Non-current investments 4620.80 4741.90 5026.41 5277.73
c) Deferred tax assets 0.00 177.60 198.91 218.21
d) Long Term loans and advances 208.70 157.80 172.00 184.04
e) Other non-current assets 1731.50 2046.60 2353.59 2636.02
Total Non Current Assets (D) 13200.20 13608.71 14669.27 15624.55
a) Current Investment 6334.40 7830.70 9240.23 10626.26
b) Inventories 2528.51 2262.30 2443.28 2614.31
c) Trade receivables 13523.60 15267.70 16794.47 18205.21
d) Cash and Bank Balances 3201.40 2222.40 2555.76 2862.45
e) Short-terms loans & advances 1879.00 1557.60 1682.21 1799.96
f) Other current assets 7871.40 5777.00 6027.96 6421.31
Total Current Assets(E) 35338.31 34917.70 38743.90 42529.51
Total Assets (D + E) 48538.51 48526.41 53413.17 58154.06

5. Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs.in.mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 43021.64 46974.13 50732.06 55297.95
Other Income 642.99 1108.15 1163.56 1210.10
Total Income 43664.63 48082.28 51895.62 56508.05
Expenditure -38929.49 -42273.80 -45506.66 -49602.26
Operating Profit 4735.14 5808.48 6388.96 6905.79
Interest -88.49 -196.90 -88.61 -75.31
Gross profit 4646.65 5611.58 6300.35 6830.47
Depreciation -577.74 -641.18 -718.12 -782.75
Profit Before Tax 4068.91 4970.40 5582.23 6047.72
Tax -1539.20 -1611.03 -1870.05 -2092.51
Net Profit 2529.71 3359.37 3712.19 3955.21
Equity capital 238.31 238.31 238.31 238.31
Reserves 20011.63 22429.93 26142.12 30097.32
Face value 2.00 2.00 2.00 2.00
EPS 21.23 28.19 31.15 33.19
Quarterly Profit & Loss Statement for the period of 31st Dec, 2014 to 30th Sep, 2015E
Value(Rs.in.mn) 31-Dec-14 31-Mar-15 30-Jun-15 30-Sep-15E
Description 3m 3m 3m 3m
Net sales 11465.64 15206.75 10011.90 12815.23
Other income 70.89 628.90 168.30 198.59
Total Income 11536.53 15835.65 10180.20 13013.83
Expenditure -10151.87 -13634.34 -9101.71 -11495.26
Operating profit 1384.66 2201.31 1078.49 1518.56
Interest -19.01 -124.11 -1.46 -1.23
Gross profit 1365.65 2077.20 1077.03 1517.34
Depreciation -156.49 -153.05 -157.61 -181.25
Profit Before Tax 1209.16 1924.15 919.42 1336.08
Tax -447.08 -601.05 -302.64 -440.91
Net Profit 762.08 1323.10 616.78 895.18
Equity capital 238.31 238.31 238.31 238.31
Face value 2.00 2.00 2.00 2.00
EPS 6.40 11.10 5.18 7.51

6. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 21.23 28.19 31.15 33.19
EBITDA Margin (%) 11.01 12.37 12.59 12.49
PBT Margin (%) 9.46 10.58 11.00 10.94
PAT Margin (%) 5.88 7.15 7.32 7.15
P/E Ratio (x) 48.92 36.84 33.34 31.29
ROE (%) 12.49 14.82 14.07 13.04
ROCE (%) 23.99 28.06 26.67 25.15
Debt Equity Ratio 0.09 0.01 0.01 0.01
EV/EBITDA (x) 2.66 2.37 2.16 1.96
Book Value (Rs.) 169.95 190.24 221.40 254.59
P/BV 6.11 5.46 4.69 4.08
Charts

7. Outlook and Conclusion
At the current market price of Rs.1038.60, the stock P/E ratio is at 33.34 x FY16E and 31.29 x FY17E
respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.31.15 and
Rs.33.19 respectively.
On the basis of EV/EBITDA, the stock trades at 2.16 x for FY16E and 1.96 x for FY17E.
Price to Book Value of the stock is expected to be at 4.69 x and 4.08 x for FY16E and FY17E respectively.
We recommend ‘BUY’ in this particular scrip with a target price of Rs.1145.00 for Medium to Long term
investment.
Industry Overview
The Indian Engineering sector has witnessed a remarkable growth over the last few years driven by increased
investments in infrastructure and industrial production. The engineering sector, being closely associated with
the manufacturing and infrastructure sectors of the economy, is of strategic importance to India’s economy.
Growth in the sector is driven by various sub-sectors such as infrastructure, power, steel, automotives, oil and
gas, consumer durables etc.
India on its quest to become a global superpower has made significant strides towards the development of its
engineering sector. The Indian government has appointed the Engineering Export Promotion Council (EEPC) to
be the apex body in charge of promotion of engineering goods, products and services from India. India exports
transport equipment, capital goods, other machinery/equipment and light engineering products such as castings,
forgings and fasteners to various countries of the world.
Coupled with favourable regulatory policies and growth in the manufacturing sector, many foreign players have
started to invest in the country. India recently became a permanent member of the Washington Accord (WA) on
June 13, 2014. The country now joins an exclusive group of 17 countries who are permanent signatories of the
WA, an elite international agreement on engineering studies and mobility of engineers.
Driven by strong demand for engineering goods, exports from India registered a double digit growth at 10.22 per
cent to touch US$ 26.4 billion in June 2014 from US$ 24.02 billion in the corresponding month last year. This
growth can be credited to the robust expansion in shipments of aircraft, spacecraft parts and automobiles. The
second best performing sector was non-ferrous metals and metal products. Engineering exports from India are
expected to cross US$ 70 billion in FY 15 registering a growth of 15 per cent over the previous fiscal, as demand

8. in key markets such as the US and the UAE is on the rise. Apart from these traditional markets, markets in
Eastern and Central European countries such as Poland also hold huge promise.
India exports its engineering goods mostly to the US and Europe, which accounts for over 60 per cent of the total
exports. Recently, India's engineering exports to Japan and South Korea have also increased with shipments to
these two countries rising by 16 and 60 per cent respectively.
Outlook
The engineering sector is a growing market. Current spending on engineering services is projected to increase to
US$ 1.1 trillion by 2020. With development in associated sectors such as automotive, industrial goods and
infrastructure, coupled with a well-developed technical human resources pool, engineering exports are expected
to touch US$ 120 billion by 2015.
Also, the Union Budget 2014-15 has allocated funds for several infrastructure projects which are further
expected to provide a boost to the engineering sector. The industry can also look forward to deriving revenues
from newer services and from newer geographies with Big Data, Cloud, M2M and Internet of Things becoming a
reality.
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