Whalesbook
Profit Margins Improve on Better Execution
Thermax's EBITDA margins rose to 10.93% in Q4FY26, up from 9.69% last year. This improvement was driven by better absorption of fixed costs and careful selection of projects. The company has also completed many older, lower-margin orders in its energy solutions and flue gas desulfurization businesses, clearing the way for higher profitability.
Record Orders Boost Future Revenue
A major highlight was the significant jump in order bookings, including a Rs 1,600-crore order for a super-critical boiler. This deal boosted the total order book by 27% year-on-year to Rs 13,604 crore, significantly improving future revenue prospects. Thermax has a healthy bid pipeline of over Rs 25,000 crore, with a focus on selective bidding and strong margins.
Green Shift and Capacity Growth
Looking ahead, Thermax is well-positioned to benefit from demand in sectors like power, industrial infrastructure, data centres, and especially green transition technologies. The company sees major opportunities in decarbonisation and energy efficiency for industries such as refining, steel, and cement. Waste Heat Recovery Systems and clean industrial processes are expected to be key growth drivers. To meet this demand, Thermax is expanding its manufacturing capacity through new projects and upgrades for boiler and cooling facilities. New cooling lines are set to start within 12 months, with annual capital expenditure planned between Rs 100-150 crore.
Global Risks and Chemicals Segment
Management remains aware of global uncertainties, such as geopolitical tensions in the Middle East. While current projects haven't been directly affected, concerns exist over rising freight costs and potential delays in new orders from the region. However, future reconstruction efforts could create new business opportunities. Supply chain issues and rising raw material costs continue to impact the chemicals segment, though management plans to offset these by passing on costs and growing sales volumes.
Market Views and Valuation
Thermax shares currently trade at a premium, priced at roughly 58 times its estimated FY28 earnings. This valuation suggests strong market confidence in the company's strategic direction, improving profitability, solid financial standing, and its role in India's infrastructure spending and the global energy transition.