Thermax Q4FY18 Concall Summary


Quarter Highlights

Thermax Q4FY18 Performance.png
  • The order intake in the fourth quarter increased by 37% from last quarter
  • Overall order intake of the group increased by 45% in comparison to the preceding year to reach the figure of INR 6380 crores
  • Revenue of the quarter dipped by 5% in comparison to the corresponding quarter last year
  • Overall revenue of the year stood at INR 486 crores which is 2% less than the last year’s revenue
  • The overall group’s PBT stood 100 basis less than the preceding year PBT
  • However the Thermax’s own PBT was marginally improved by .2% in comparison to the last quarter
  • PBT of the whole year stood at 10.1%


  • Q4 didn’t turned out to be as expected in terms of the revenue because of the various reasons
  • Introduction of the e-waybill posed problem of synchronization with the suppliers and this factor standalone created the impact of INR  100 crore
  • Danstorker group had negative performance in the quarter
  • Chinese subsidiary had to take prudent decisions for the ongoing litigations
  • Indonesian subsidiary saw uprise in the operating expenses which could become better in the coming quarter
  • Until the issues at the china subsidiary are sorted out it would be utilized as a manufacturing facility to cater to the demand coming from other markets
  • Air pollution line of the business had to bear the brunt of increasing steel prices and reported very low profitability
  • In the chemical business the accounting of  plant depreciation resulted in very less profitability

Agreement with Babcock & Wilcox

  • Thermax would buy 49% shareholding of the Babcock & Wilcox and acquire the entire manufacturing facility also
  • The move would strengthen the Thermax technology front in the Supercritical, subcritical and captive size boilers
  • They would get the technology helpful in reducing the NOx levels which would otherwise be very costly to acquire

New Facilities 

  • Dahej plant has started its operations and is expected to reach its maximum capacity by the October
  • Factory in the Sricity is expected to become operational by the end of Q2 in the forthcoming year

First Energy

  • Plant is recovering from the decrease demand owing to the high oil prices
  • Currently 1100 tonnes is the total pellet sales which is expected to increase to the level of 1400 tonnes per month once the oil prices become stable at $55-60 per barrel
  • It is expected to break even in the current fiscal year

Sectoral Outlook

  •  In both energy and environment sectors company has enough orders to execute which were not there last year
  • The problem of the cashflow has also been resolved and Thermax is positive about both the sectors in the coming future
  • Cost of the raw materials has very less impact, barring one of the steel type all are purchased  well in advance
  • Chemical business front has been affected by the increasing oil prices due to increase in the cost of Styren
  • Also the overall capacity utilization was little less than the 50% which would increase to 70-75%
  • Also the overall capacity utilization was little less than the 50% which would increase to 70-75% once the Dahej plant is fully operational


  • Phase 2 expansion at the Dahej factory would be  carried out with capex expenditure of INR 50 crores
  • In the Indonesian factory only $15 million has been spent out the planned $25 million, the remaining amount would be expensed in the phase 2

Nature of orders and Margins

  • The very nature of the business in this domain is to have fixed price contracts until mentioned explicitly in the contract clause
  • The margins estimate has to be made at the time of the contract
  • Most of the raw materials already have a fixed rate and there would be variation due to the prices of the steel which has to be bought from the open market at the prevailing prices
  • This year Thermax would aim for the double digit margins
  • Orders from PSUs in fertilizer, steel and aluminium industries are expected

Business opportunities in Foreign countries

  • Plenty of opportunities are expected in the Middle East region
  • As the focus of most of the companies across the globe has shifted to gas based fuel therefore, Thermax would ass that to its capability as well


  • Competition for Thermax is not significant in the capacity in which they operate