Thermax (THERMAX) Q2 25/26 earnings summary

Executive summary

• Management is confident in a strong second half, with most legacy low-margin projects nearing completion and a focus on profitable order intake.

• Order booking rose 6% year-over-year to Rs. 3,551 crore, driven by Industrial Products and Green Solutions, with improved backlog quality.

• Operating revenue declined 5% year-over-year to Rs. 2,474 crore, with PAT down 40% due to project cost overruns and absence of prior year incentives.

• A change in accounting policy for TOEL/TOESL aligns order and revenue recognition, improving transparency but not impacting profitability.

• The company is prioritizing quality over volume in new orders, passing on unprofitable government projects and focusing on higher-margin opportunities.

Financial highlights

• Q2 FY26 order booking: Rs. 3,551 crore (+6% YoY); order balance: Rs. 12,300 crore (+6% YoY).

• Operating revenue: Rs. 2,474 crore (-5% YoY); PAT: Rs. 119 crore (-40% YoY); PBT: Rs. 174 crore (-35% YoY).

• Standalone PAT for Q2 FY26: Rs. 226 crore, up 109% YoY, aided by Rs. 141 crore dividend income from a subsidiary.

• Cash & investments stood at Rs. 2,739 crore (+4% YoY).

• Last year’s revenue and PBT included a Rs. 66 crore incentive, impacting YoY comparisons.

Outlook and guidance

• Orders, revenue, and profits are expected to grow year-over-year, with a strong backlog supporting next year’s performance.

• Management expects a blended project margin of around 10% at the PBT level, higher than previous guidance.

• Strong order inflows expected from metals, power, and petrochem sectors, with positive market sentiment and stable input costs.

• Industrial products, TBWES, chemicals, and TOEL are all expected to contribute more significantly to future growth.

• Standalone order booking for the quarter rose 22% to Rs. 1,991 crore; order balance up 9% to Rs. 6,981 crore.