Thermax shares jump 12% after Kotak raises price targets on margin hopes

Shares of Thermax Limited are trading with gains of up to 12% after brokerage firm Kotak Institutional Equities retained an ‘Add’ rating on the stock, saying the company is walking the talk.The brokerage has raised its price target by 8.5% to ₹3,800, up from ₹3,500 per share. The new target implies a potential upside of about 4% from Wednesday’s closing level.

Kotak said that FY25 has been an active year for Thermax, marked by the launch of several new offerings. The brokerage highlighted growing traction in Thermax’s fledgling energy transition solutions for industrial customers, the initiation of phase II of key R&D projects, and new partnerships, particularly in the chemicals portfolio.
From a financial perspective, the dominant portion of Thermax’s revenue portfolio is delivering double-digit EBIT margins, indicating strong profitability as legacy projects are phased out. Kotak sees reasonable growth prospects ahead.The brokerage also sees a strong case for EPS to grow at a CAGR of over 20% during FY2025-28, and has increased its earnings estimates by 3%, driven by improved margins.

Kotak has factored in a 250 basis point expansion in EBITDA margins over FY2025-28 (20 bps higher than previous estimates) and a slightly higher 13% revenue CAGR (up by 50 bps from earlier projections).