Target: ₹2,771

CMP: ₹2,994.50

At the recent Thermax Fest held on December 15th, 2023, TMX showcased its innovative solutions across coal gasification, bio-CNG & biomass fuels, green hydrogen, renewable hybrid energy, construction chemicals, water, cooling & heating technologies, Thermal HVAC and industrial asset management.

Although international manufacturing has not worked out as planned, there are some opportunities in Africa, West Asia and South East Asia. India, however, remains the fastest growing market for Thermax’s offerings and the company is looking to capitalise on opportunities arising out of government policies on carbon footprint reduction, green energy, wastewater treatment, etc.

Meanwhile, the chemicals business is unrelated to the energy transition theme, yet is expected to grow strongly over the next 4-5 years.

We believe Thermax is well placed to gain from increasing thrust on energy transition and de-carbonisation initiatives.

The stock is currently trading at a PE of 46.4x/41.5x FY25/26E. We maintain our ‘Hold’ rating with a TP of ₹2,771 (same as earlier), valuing it at a PE of 43x Sep’25E (same as earlier). We are positive on the long-term prospects of Thermax , while maintaining a neutral view for the near-term given steep valuations.