Thermax Limited: Strategic Growth with Major Contracts and Strong Stock Performance

In a significant development in the energy and environment sector, Thermax Limited, a leading provider of energy and environmental solutions, witnessed a surge in its stock price after securing a major order from Jindal Energy Botswana Pty Ltd. This order, valued at Rs. 516 crores, marks another milestone for the company as it continues to expand its presence in the global market. Let's delve into the details of this recent success, the company's financial performance, and its broader market outlook.

Key Development: Major Order Secured by Thermax Subsidiary

On July 14, Thermax Babcock & Wilcox Energy Solutions Limited (TBWES), a wholly-owned subsidiary of Thermax, secured a repeat order worth Rs. 516 crores from Jindal Energy Botswana Pty Ltd. This order is for the second phase of a 600 MW energy project in Botswana, Southern Africa. The project will involve the setting up of an additional 300 MW energy plant, with TBWES responsible for supplying two 550 TPH CFBC (circulating fluidised bed combustion) boilers. The scope of work includes the design, engineering, manufacturing, testing, and commissioning of the project.

This contract comes on the heels of a previous order secured on July 5, valued at Rs. 513 crores, also from Jindal Energy Botswana Pty Ltd. Both orders are part of a larger initiative to supply power to the national utility grid, addressing the region's growing power needs and enhancing energy security in Southern Africa. The repeat business from Jindal Energy underlines the trust and reliability Thermax has established in the energy solutions domain.

Stock Market Reaction

Following the announcement, the shares of Thermax Limited saw a substantial rise of 6.06%, reaching Rs. 5,014 during the trading session. As of 10:50 a.m. on the same day, the stock was trading at Rs. 4,951.45, up by 4.74% from its previous closing price of Rs. 4,727.25. With a market capitalization of Rs. 58,913.8 crores, this increase in share price reflects the positive investor sentiment surrounding the company's recent achievements.

Overview of TBWES and Its Capabilities

Thermax Babcock & Wilcox Energy Solutions Limited (TBWES) specializes in providing equipment and solutions for generating steam for industrial processes and power generation. The company offers a wide range of technologies, including solutions for the combustion of various fuels (solid, liquid, and gaseous) and waste heat recovery from industrial processes. Its heaters are utilized across industries such as chemicals, petrochemicals, and refineries. Additionally, TBWES provides renovation and modernization services for old boilers and heaters, ensuring energy efficiency and operational optimization for its clients.

Strategic Partnership with Ceres Power

Thermax has also made strides in the clean energy sector. On September 12, Thermax Limited announced a strategic collaboration with Ceres Power Limited, a subsidiary of Ceres Power Holdings plc. This partnership involves a non-exclusive, global license agreement for the development, manufacturing, and commercialization of solid oxide electrolysis cell (SOEC) technology-based modules.

Under this agreement, Thermax will produce and service stack array modules (SAM) and multimegawatt SOEC electrolyzer modules. This partnership allows Thermax to leverage its expertise in heat integration and waste heat recovery to innovate in the clean energy space, contributing to the development of sustainable technologies and advancing the company’s global reach in the renewable energy sector.

Strong Financial Performance in FY25

Thermax Limited continues to exhibit strong financial performance. In Q1 FY25, the company reported operating revenue of Rs. 2,184 crores, reflecting a 13% year-on-year growth from Rs. 1,933 crores in Q1 FY24. The company’s net profit surged by an impressive 81.6%, reaching Rs. 109 crores, compared to Rs. 60 crores in the same quarter of the previous fiscal year.

Thermax’s order book remains robust, with a consolidated order intake of Rs. 2,569 crores for FY25, indicating stable demand for the company’s products and services. The order balance grew marginally by 1.7% year-on-year, from Rs. 10,505 crores to Rs. 10,681 crores, underscoring the company’s solid market position and consistent growth trajectory.

Impressive Stock Performance

Over the past year, Thermax Limited’s stock has delivered substantial returns, gaining nearly 77.6% over 12 months. In the last six months alone, the stock has provided returns of around 33.7%. So far in 2024, Thermax shares have posted positive returns of approximately 60.5%, making it a standout performer in the energy and environment sector.

About Thermax Limited

Thermax Limited is a leading player in the global energy and environment space, offering a comprehensive portfolio of products and services. The company’s offerings include boilers and heaters, absorption chillers/heat pumps, power plants, solar energy equipment, air pollution control systems, water and waste recycling plants, ion exchange resins, performance chemicals, and related services. With a strong commitment to sustainability and innovation, Thermax is at the forefront of providing cutting-edge solutions that address the growing demand for energy and environmental efficiency across industries.

Strategic Considerations for Investors

For investors looking at Thermax Limited, the company’s recent contract wins, strong financial performance, and strategic partnerships in the clean energy sector make it an attractive proposition. The energy sector, particularly in regions like Southern Africa, presents substantial growth opportunities, and Thermax’s ability to secure repeat orders reflects its strong market presence and execution capabilities.

Moreover, the company’s partnership with Ceres Power positions it well in the evolving clean energy market, providing a foothold in advanced technologies like SOEC electrolysis. Coupled with its solid financials and consistent stock performance, Thermax Limited remains a promising investment in both the short and long term.

In conclusion, Thermax Limited’s recent order win from Jindal Energy Botswana, combined with its strategic moves in the clean energy space and strong financial performance, highlight its potential for sustained growth. As the company continues to expand its global footprint and innovate in the energy sector, investors should keep a close eye on Thermax’s stock performance and upcoming developments in its business operations.

Disclaimer : The information provided in this article is for informational purposes only and should not be considered as investment advice. Stock market investments involve risks, and it is crucial for investors to conduct thorough research and consult with financial advisors before making investment decisions. Neither the author nor the publication assumes responsibility for any financial losses resulting from investment decisions based on this content.