Thermax Reports Flat Performance for Q2 FY25, But Shows Positive Trends in Key Financials

Thermax, a leading engineering company in the industrial equipment industry, has recently announced its financial results for the quarter ending September 2024. The company has reported a flat performance for the quarter, with a score of 2 out of 10, which has improved from -10 in the last 3 months.

Despite the overall flat performance, there are some positive trends seen in the financials of Thermax. The company’s operating profit (PBDIT) for the quarter was the highest in the last five quarters at Rs 277.97 crore, indicating a positive trend in the near term. The operating profit margin has also improved, reaching its highest at 10.64% in the last five quarters, showcasing the company’s improved efficiency.

Thermax’s profit before tax (PBT) less other income for the quarter was also the highest in the last five quarters at Rs 206.48 crore, with a positive trend in the near term. The company’s profit after tax (PAT) for the quarter was also the highest in the last five quarters at Rs 197.03 crore, with a positive trend in the near term. Both PBT and PAT have also shown a year on year growth of 36.19% and 24.9% respectively.

However, there are some areas of concern for Thermax based on its financials. The interest cost for the nine-month period has increased by 41.65%, indicating a rise in borrowings. The company’s debt-equity ratio has also been consistently increasing in the last five half-yearly periods, reaching its highest at 0.32 times. This suggests that the company is relying more on borrowings to fund its operations, which may lead to a stressed liquidity situation.

The company’s operating cash flow has also been declining, with the lowest reported at Rs 247.30 crore in the last three years. Additionally, the company’s short-term liquidity is deteriorating, with the lowest cash and cash equivalents reported at Rs 766.76 crore in the last six half-yearly periods. Moreover, Thermax’s dividend payout ratio has been consistently decreasing in the last five years, indicating a lower distribution of profits as dividends.

Overall, Thermax’s financial performance for the quarter ending September 2024 has been flat, with some positive trends in its operating profit and profit before tax. However, there are some areas of concern, such as increasing debt and declining cash flow, which the company needs to address in order to maintain a stable financial position. Based on these factors, MarketsMOJO has given a ‘Hold’ call for Thermax’s stock.