Motilal Oswal
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Motilal Oswal

After strong Q4 earnings, Thermax expects single-digit revenue growth in FY20

Updated : May 24, 2019 02:15 PM IST

Thermax Ltd posted a 67 percent on year jump in its consolidated net profit at Rs 126.90 crore for the quarter ended March 2019, mainly on account of higher revenues. The company's consolidated net profit was at Rs 75.69 crore for the quarter ended on March 31, 2018, it said in a BSE filing. Total income rose to Rs 2,125.62 crore in the March quarter from Rs 1,187.96 crore in the year-ago period. The company's consolidated net profit for 2018-19 rose to Rs 325.43 crore from Rs 231.16 crore in 2017-18. Total income in the last fiscal also rose to Rs 6,123.05 crore from Rs 4,602.03 crore.

In an interview to CNBC-TV18, MS Unnikrishnan, MD at Thermax said the margin reduction was due to two challenging orders in the EPC segment.

“The margin reduction for the year or for the quarter are attributable to two specific instances. In the EPC (engineering, procurement and construction) business of the company, we have had two challenging orders, a good part of which got over in the current year and partly gets spilled over to the next year. Similarly, our European subsidiary, Danstoker had a challenging year in the current year,” he said.

“If I were to keep these two aside, there had been an improvement in the overall margins in the environment business. It has gone up from 4.2 percent to 6.7 percent. Most of the product business in the domestic and in the other international markets have done better. However, these negatives have had an impact on the overall margins,” Unnikrishnan added.

On the revenue growth, he said, “Current quarter certainly had an impact on account of some of the larger project orders where we could be having the revenue recognition done."

“We are opening the current year with a lower order carry forward than the previous year. However, there are short cycle orders going to happen because the order intake in the last four months had been not so good in the domestic market owing to political uncertainty prevailing. But we are expecting an acceleration in order intake after the election outcome. So we are capable of executing short-cycle orders. Depending upon how it happens in the first, second, and third quarter we may not grow as much as we have grown in the current year, but maybe in single digits in the next year is what I should be expecting,” Unnikrishnan said.
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