A maintenance worker inspects a SolPac D160 parabolic dish in a solar field, comprising of solar concentrating reflectors developed by Thermax. (Photographer: Dhiraj Singh/Bloomberg)

Why Thermax Expects Better Earnings Performance This Year

Thermax Ltd. is confident of delivering better earnings in 2018-19 on the back of a strong order book and improved operations in the European market.

This despite the engineering company missing the street’s estimates for the quarter ended March due to confusion regarding the introduction of e-way bill.

“I’m entering the year with Rs 5,700 crore worth of orders, which is 43 percent higher than the previous year,” Managing Director and Chief Executive Officer MS Unnikrishnan told BloombergQuint. “I don’t expect anything to go wrong in the any of these orders,” he said. These are all “solid orders”.

The operating margin in Europe expanded 2-3 percent in the March quarter against a contraction earlier. “Europe is not the Europe we looked at three years ago with skepticism,” Unnikrishnan said.

Thermax’s share price fell as much as 3.6 percent to Rs 1,120 apiece today. The stock has declined 5.3 percent in 2018 compared with the 2.3 percent rise in the benchmark S&P BSE Sensex.

Here are the other highlights from the interview with Unnikrishnan:

  • Thermax’s performance in the last quarter did not meet expectations.
  • Confusion regarding the implementation of e-way bill impacted its performance.
  • Order intake was in-line with internal estimates.
  • Earnings per share has gone up 3.5 percent.
  • Asking rate in the last quarter could have been 10 percent more, but this was a one-off.
  • Revenue will be substantially higher in the current financial year, with a double-digit growth figure.
  • Margin improvements are likely in Europe.
  • Outlook for international markets looks good.
  • As on March 31, Thermax’s consolidated order intake was Rs 6,380 crore, 45 percent higher than last year’s Rs 4,394 crore.
  • Overall, customer advance, closure in some cites and execution of some large projects have decreased the working capital cycle days for the company.
  • Thermax intends to fund the Babcock deal through internal accruals.
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