Thermax reported a sharp 85% decline in net profit for the first quarter of FY27, impacted by cost overruns on a legacy government project and logistics delays. Despite the profit dip, revenue grew 7% and the company maintains a strong order book of over ₹14,000 crore, expecting a recovery in performance over the coming quarters.
Thermax Limited faced a difficult start to fiscal year 2027, with net profit sliding 85% year-on-year to ₹22 crore for the quarter ended June 2026. The performance was heavily hit by a ₹91 crore cost overrun on an older government engineering, procurement, and construction project. Additionally, logistics issues in the Middle East caused the delay of finished goods shipments worth roughly ₹300 crore, which directly impacted the quarter's bottom line.
While profitability saw a significant drop, the company's core operations showed stability. Total revenue for the quarter grew 7% compared to the same period last year, reaching ₹2,303 crore. The reported profit also faced an unfavorable comparison because the same quarter last year included a ₹56 crore boost from a one-time state incentive that was not repeated this year.
Profit margins varied across business segments, reflecting the difficult operational environment. The Industrial Products segment saw its EBITDA margin decline to 6.1% from 8% a year ago, primarily due to higher raw material expenses. The Industrial Infrastructure division, which took the brunt of the legacy project cost issues, reported margins of 2.5%. Meanwhile, the Green Solutions segment continued to operate at a loss, reporting a negative margin of 6.9% for the quarter.
Despite these short-term pressures, the company’s order book stands at a record ₹14,045 crore, marking a 23% increase over the previous year. This large backlog gives the company confidence regarding revenue visibility for the remainder of the fiscal year. Management stated that they expect quarterly revenues to climb above ₹3,000 crore for each of the next three quarters. This projection is backed by the expected recognition of the ₹300 crore in deferred revenue from the first quarter and the upcoming booking of major domestic and international projects. A recent order for data center cooling systems in the United States valued at ₹400 crore has further added to the company’s future growth prospects.
Looking ahead, the company expects profit margins to improve as execution stabilizes and the impact of these one-time project overruns fades. Management has emphasized that they are tightening project evaluation and risk management processes to avoid similar surprises in the future. The company has also noted that its exposure to older, riskier public sector EPC projects has been significantly reduced. Investors will likely monitor whether the company can successfully meet its revenue targets of over ₹3,000 crore per quarter and if the margins in the Green Solutions and Industrial Infrastructure segments show the expected recovery.