Thermax shares are up 60% in one year. Is there further momentum for this energy player?

The importance of the energy transition in addressing climate change and pollution cannot be overemphasized. India’s progress through this transition has been admirable, setting ambitious goals well ahead of many other countries.

This progress consists of the development of a strategic path supported by appropriate policies, plans and activities. There is also a continuous process of reassessment and adjustment based on newly acquired knowledge, technological improvements, and changing cost dynamics.

India’s announcement that it will achieve net-zero emissions by 2070 and meet 50% of its electricity needs from renewable energy sources by 2030 is an important milestone in the global fight against climate change.

Due to India’s sheer size and enormous growth potential, its energy demand is expected to grow faster than any other country in the coming decades. Customers are increasingly looking for environmentally friendly alternatives.

Thermax defines this as hybrid renewable energy from waste (including biomass), energy, heat recovery, solar and wind. We are also exploring collaborations to promote eco-friendly solutions. There are plans to invest in coal gasification facilities in Bengal and introduce bio-CNG technology to Bengal.

Over the past year, the energy company’s stock price has soared 60%, delivering significant returns to investors. Over a three-year period, the stock’s value has increased several times, providing investors with an impressive return of 157%. So, let’s take a closer look at the article to evaluate the future of this company.

Thermax Corporate Overview

Established in 1966 as Wanson India, Thermax Group is headquartered in Pune, India. It has grown into a prominent multinational company in the energy and environment sector, strategically expanding into markets around the world and serving a variety of industries.

The company focuses on ensuring clean air, energy and water, providing integrated solutions in heating and cooling, electricity generation, water treatment and recycling, air pollution control and chemicals.

As a one-stop utility solutions provider, Thermax provides complete operation and maintenance support for all business sectors, as well as a wide range of professional services such as retrofits, renovations, upgrades and audits.

The company has also expanded its service portfolio by introducing digital solutions that meet all asset lifecycle requirements in real time across a wide range of products.

Thermax business segments

The company’s business is categorized into four core segments: Industrial Products, Industrial Infrastructure, Green Solutions and Chemicals.

industrial products

The Industrial Products division is the company’s largest portfolio. In the clean energy sector, we offer packaged boilers and fired heaters using a variety of heating media, including steam, thermal fluids, hot water and hot air, as well as complete process heating systems.

We also offer biomass combustion equipment for the combustion of green fuels such as agricultural and industrial waste, and heat recovery systems for sustainable energy generation. Improve performance with steam engineering products and accessories.

In financial year 2022-23, the industrial products business accounted for 40.2% of the group’s total operating revenue (compared to 40.8% in financial year 2021-22).

industrial infrastructure

The new division, Industrial Infrastructure, includes the Projects & Energy Solutions (P&ES) and Thermax Babcock & Wilcox Energy Solutions (TBWES) businesses. P&ES provides captive power plants, cogeneration systems, waste heat recovery plants and independent power plants for the utility sector on an EPC basis.

The company offers dependent and stand-alone power plants that run on a variety of renewable fuels. We also provide equipment and solutions for conventional fuels (solid, liquid and gaseous).

In financial year 2022-23, the industrial infrastructure business accounted for 47.3% of the group’s total operating revenue (compared to 47.3% in financial year 2021-22).

Eco-friendly solution

Thermax Onsite Energy Solutions Limited (TOESL) is part of the Green Solutions segment and provides long-term green utilities including steam, heat, treated water, chilled water and cogeneration.

Thermax has also expanded its EPC-based renewable energy capabilities through First Energy Private Limited (FEPL) to develop solar, wind and hybrid farms (including storage) using the opex/BOO model.

During the financial year 2022-23, the industrial infrastructure segment contributed 47.3% to the group’s total operating revenue, which is consistent with its performance in the previous financial year, 2021-22.

chemistry

The Chemicals division produces and supplies a variety of specialty chemicals that help improve process and water use efficiency in a variety of industries.

Thermax is Asia’s largest manufacturer and exporter of ion exchange resins and a pioneer in wastewater treatment chemicals.

It also produces chemicals for construction and oil fields. With these specialty chemicals and our extensive dealer network, we serve a wide range of industry sectors and customers globally. The United States is an important market for the company.

The segment contributed 8.1% to the group’s total operating revenue in fiscal 2022-23 (8.5% in fiscal 2021-22).

Thermax Finance

In fiscal 2023, Thermax saw significant growth in its revenue, surging 32% to reach ₹8,089.81 crore compared to ₹6,128.33 crore in fiscal 2022. Analyzing four years from FY2020 to FY2023, the company recorded its revenue at a compound annual growth rate (CAGR) of 12.7%.

At the same time, there has been a notable increase in net profit, with a 60% increase from ₹212.45 crore in fiscal 2022 to ₹450.7 crore in fiscal 2023. Cumulative net profit over the four years from fiscal 2020 to fiscal 2023 recorded a CAGR of 28.49%.

In FY23, Thermax maintained favorable financial metrics with return on equity (ROE) of 12.25% and return on invested capital (ROCE) of 14.53%.

Thermax’s future plans and strategies

Thermax defines a ‘green’ order as an order that includes non-fossil fuel use in the Energy sector, all orders in the Environmental sector and non-fossil application-based orders in the Chemicals sector.

Orders under the green portfolio increased from 40% in FY10 to 74% in FY23. Orders are primarily driven by chemicals used in waste heat recovery, FGD (due to sulfur dioxide emission minimization regulations) and water treatment.

Under the plan, TMX on March 23 signed an MoU with Fortescue Future Industries (FFI), the green arm of the Australian conglomerate, to explore green hydrogen projects in India. TMX’s entry into the green hydrogen market.

Thermax Ltd has announced that it is in discussions with a number of steel companies in the East over a commercial-scale high ash coal gasification project. Thermax is also in discussions with Coal India on coal gasification technology.

CIL plans to pursue coal-SNG (synthetic natural gas) business in the Eastern Coalfields Limited command area. In this field, Thermax claims to have patented technology. In this field, Thermax claims to have patented technology.

conclusion

In conclusion, Thermax has demonstrated impressive growth and a strong commitment to green energy solutions. With ambitious plans for expansion into emerging sectors such as green hydrogen and coal gasification, the company appears well-positioned for continued success.

But what do you think about Thermax’s prospects? Do you think their strategy will enable them to capitalize on the growing demand for sustainable energy? Please share your thoughts on this innovative Indian energy company.

Written by Nalin Surya

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