Thermax Limited Q3 FY 2022-23 Conference Call Summary
Conference Call Overview
• Date: February 13, 2023
• Participants: CEO Ashish Bhandari, CFO Rajendran Arunachalam
• Focus: Company performance, outlook, and operational insights
Key Highlights
• Order Momentum
• Strong order momentum noted, but trend towards fewer, larger opportunities.
• Challenges in commodities cycle affecting revenue predictability.
• Optimism about climate change technology opportunities.
• Operational Expenditures and Investments
• Insights on capital investments and expected internal rates of return (IRR) for solar and water treatment solutions.
• Energy business segments: solutions (green utilities), projects, and products.
• Short-term losses expected in the solutions segment due to significant investments.
• Margin Improvement
• Current energy sector margin at 7.6%.
• Potential for blended energy margins to reach 8-9% in the medium term.
Order Pipeline and Market Insights
• Sector Demand
• Lack of large projects in petrochemicals may impact topline growth.
• Positive demand anticipated in steel, sugar, cement, chemicals, and pharmaceuticals.
• European operations stabilizing with improved demand.
• Environmental Segment
• FGD business expected to achieve consistent profitability after previous losses.
• Momentum in mid-range orders (Rs. 100 crores to Rs. 200 crores) confirmed.
• Investments in New Technologies
• Ongoing initiatives in bio-CNG, solar energy, coal gasification, and hydrogen.
• Commitment to developing sustainable technologies despite initial risks.
Competitive Landscape and Growth Prospects
• Market Position
• Highly competitive market with no unique technologies exclusive to Thermax.
• Leadership in biomass and waste-to-energy sectors due to strong engineering reputation.
• Export Opportunities
• Slowdown in large international projects, but positive pipeline for smaller projects in Southeast Asia and Africa.
• Global companies seeking alternatives to Chinese suppliers may benefit Thermax.
• Future Growth
• Optimism for double-digit growth contingent on capital expenditure in India.
• Anticipation of larger projects from the steel sector in the second half of FY 2024.
Specific Inquiries and Responses
• Order Inflows Timeline
• Anticipated order inflows from mid and large-sized projects in the steel sector expected in the second half of FY 2024.
• Chemical Segment Performance
• Optimism for double-digit profitable growth over a 3-5 year cycle despite U.S. market slowdowns.
• FGD Order Book and Revenue Recognition
• Expected revenue recognition of Rs. 500-600 crores for FY 2023 and FY 2024.
• Oil and Gas Pipeline
• Slowdown in large refinery projects; smaller service and upgrade projects continue.
• Updates on MOUs
• Solar film project not progressing; hopeful for future navy orders for propulsion systems.
Conclusion
• The call concluded with expressions of gratitude and optimism for future growth and project developments.