Thermax (THERMAX) Q3 25/26 earnings summary

Executive summary

• Q3 FY26 performance was mixed, with operating revenue up 4% year-over-year to Rs. 2,635 crore and profit after tax rising 80% to Rs. 205 crore, aided by exceptional gains, but management described the quarter as "okay, not great" due to softer revenue and profitability.

• Order booking rose 34% year-over-year to Rs. 3,080 crore, with the order book up 11% to Rs. 12,641 crore, driven by strong Industrial Products and Infra segments and major international wins, including Dangote and data center cooling projects.

• International business showed significant growth, with 50% of product business orders from overseas and notable expansion in the MENA region.

• Management remains bullish on Q4 and next year, expecting a strong finish to FY26 and robust backlog to support future growth, especially in data centers and green solutions.

• Celebrated 30 years of NSE listing and received a Contractor Safety Management Award for a subsidiary.

Financial highlights

• PBT before exceptional items grew 47% year-over-year to Rs. 230 crore; PAT margin improved to 7.8% from 4.5%, with an exceptional gain of Rs. 59 crore from provision reversal and related interest.

• Chemicals segment saw a significant contraction in profitability, with INR 50 crore lower PBT year-to-date versus last year, mainly due to new asset costs and under-recovery of fixed costs.

• Industrial Products EBIT margin declined to 9.3% due to slower growth in the heating line and a mix shift toward water and Enviro, but revenue and backlog remain strong.

• Cash and investments stood at Rs. 2,558 crore, down 8% year-over-year.

• Commodity price pressures (copper, steel) are emerging, with management actively monitoring and mitigating risks through early procurement and margin locking.

Outlook and guidance

• Management expects Q4 to deliver a double-digit sequential revenue increase, though full-year growth will be modest (around 1% year-over-year).

• Data center and MENA export markets are identified as high-potential growth areas.

• Chemical segment profitability is expected to improve in Q4 and next year, targeting 13-14% EBITDA margins, though still below historical highs.

• Industrial Products and Infra segments are expected to see margin recovery as project mix improves and execution accelerates.

• Green Solutions business targets 250 MW addition this year, 700 MW next year, and 1.1 GW by FY28, with monetization plans under consideration.