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Thermax’s H2 recovery bet runs into old execution hurdles

By · Published by Everything Blog

In short

Slower execution and deferred international shipments worth ₹200–300 crore restricted the company's September quarter revenue growth to 11% year-on-year. Although leadership targets ₹7,000 crore in revenue for the fiscal year's second half, fixed-price contracts and green solutions impairments kept the recent Ebitda margin flat at 7%. Furthermore, sluggish industrial demand led the firm to cut its full-year order inflow growth forecast to high single digits. Consequently, brokerage firms have slashed multi-year earnings projections and valuation multiples.

Key points

  • Thermax lowered its full-year order inflow growth guidance to high single digits because…: Thermax lowered its full-year order inflow growth guidance to high single digits because of soft industrial demand.
  • Second-quarter operating profitability stayed flat at 7% due to shipment hold-ups, impair…: Second-quarter operating profitability stayed flat at 7% due to shipment hold-ups, impairments, and fixed-price contracts.
  • Motilal Oswal Financial Services cut earnings estimates through FY29, pointing to chronic…: Motilal Oswal Financial Services cut earnings estimates through FY29, pointing to chronic execution risks and depressed margins.

Sources checked by our analysis pipeline: 1

Thermax’s share price has more than halved from its 52-week high of ₹5,277.80 seen in June, weighed down by continued earnings disappointment.

In the September quarter (Q2FY27), deferred higher-margin international shipments, worth ₹200–300 crore, capped consolidated revenue growth at 11% year-on-year (y-o-y) to ₹2,756 crore.

Management expects H2FY27 revenue to touch ₹7,000 crore versus ₹5,059 crore in H1. Revenue growth will be buoyed by export orders and lower contribution from low-margin legacy projects nearing completion.

Order inflows fell 8% y-o-y to ₹3,259 crore, driven by weak intake in the industrial products segment. H1FY27 order inflows slid 4% to ₹6,100 crore, taking the order book as of September to ₹14,250 crore, up 16%.

From its earlier guidance of over 10% growth in FY27 order inflows, Thermax now anticipates high single-digit growth. It expects at least one supercritical boiler order in H2.

However, JM Financial Institutional Securities noted that even if one large thermal power win is factored in, FY27 order inflow growth is likely to be only 5%.

“Investors are occasionally enthused about the potential for order wins in the thermal…

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