Thermax at new low

Thermax is currently the top loser on the BSE, plunging 17.47% or Rs. 580.30 to Rs. 2,742.20, against its previous close of Rs. 3,322.50. The stock opened sharply lower at Rs. 3,010, touched an intraday high of Rs. 3,033.35 and fell to a fresh 52-week low of Rs. 2,670. Trading volumes surged to 1.17 lakh shares against a two-week average of approximately 14,000 shares, reflecting heavy selling following disappointing Q2FY27 earnings announced yesterday.

Trigger

• Revenue rose 11.4% YoY to Rs. 2,755.9 crore.
• EBITDA increased 12.9% YoY to Rs. 194.1 crore.
• EBITDA margin remained weak at approximately 7%, improving by just 9 bps YoY.
• Consolidated net profit declined 5.3% YoY to Rs. 113.1 crore from Rs. 119.4 crore.
• Industrial Products profitability was affected by an unfavourable product mix and higher input costs.
• Green Solutions recorded an impairment provision of Rs. 15 crore relating to a hybrid renewable energy project.
• Order booking declined 8.2% YoY to Rs. 3,259 crore.
• Outstanding order book increased 15.9% YoY to Rs. 14,250 crore, providing revenue visibility despite weaker fresh orders.

The sharp decline is significant because Thermax's revenue growth has failed to translate into meaningful profit growth. Despite an 11.4% increase in sales, net profit contracted, reflecting pressure from raw material costs, weaker product mix and underperformance in the Industrial Products, Chemicals and Green Solutions businesses. Industrial Products margin fell to approximately 6% from 9.8% a year earlier, raising concerns over the company's operating efficiency.

Another concern is the slowdown in fresh order inflows. While the outstanding order book of Rs. 14,250 crore provides medium-term revenue visibility, the 8.2% decline in quarterly order bookings suggests weaker near-term momentum. Some large Industrial Products orders have been deferred to Q3, while Industrial Infrastructure benefited from two captive power plant orders. The market will therefore be looking for a recovery in order conversion and execution margins over the coming quarters.

Valuation is adding to the selling pressure. Even after today's sharp correction, Thermax trades at a consolidated PE of around 56 times, based on the BSE figures provided.