Shares of Thermax fell 15% to ₹2,830 on Friday as investors reacted to a 5% decline in second-quarter profit, despite an 11% rise in revenue. The results were hurt by rising input costs, an unfavorable product mix, and a ₹15 crore impairment provision in its green energy business. Fresh order bookings also dropped 8%, raising concerns about near-term growth momentum.
Thermax shares witnessed a sharp sell-off on Friday, dropping 15% to hit ₹2,830 on the BSE. This negative reaction follows the company's second-quarter fiscal 2027 earnings report, which disappointed investors despite a decent growth in top-line revenue.
For the quarter, Thermax reported a consolidated revenue of ₹2,756 crore, representing an 11% increase year-on-year. However, this growth in sales did not convert into higher profits. The company’s consolidated net profit fell by 5% to ₹113 crore, compared to ₹119 crore in the same period last year. While operating EBITDA rose by 13% to ₹194 crore, the margin expansion was minimal, failing to meet market expectations for higher profitability.
Operational Pressures and Impairments
Several factors weighed on the company's profitability during this quarter. Management noted that elevated input costs and an unfavorable product mix, particularly within the Industrial Products segment, squeezed profit margins. Furthermore, the company took a ₹15 crore impairment hit related to a hybrid renewable energy project within its Green Solutions segment. This charge served as a direct drag on the bottom line, highlighting the challenges the company faces in scaling its newer, greener business ventures profitably.
Order Book and Execution Concerns
While the company has a strong long-term foundation, the short-term outlook has caused some unease. The total order backlog grew by 16% year-on-year to reach ₹14,250 crore, which offers decent visibility for future work. However, investors reacted negatively to the decline in fresh order inflows. New order bookings for the quarter fell by 8% to ₹3,259 crore. The management attributed some of this weakness to the deferment of certain large orders to the third quarter, but the overall slowdown in new bookings has raised questions about growth consistency.
Risks and Monitorables
Investors looking at the stock may focus on how the company manages its margin profile in the coming quarters. The primary risks remain the volatility in raw material costs, which can hit fixed-price contracts, and execution hurdles in large turnkey projects. Additionally, the profitability of the Green Solutions segment is a key area to watch; while the segment is part of the company's future growth strategy, recent impairment provisions suggest that execution and cost control remain challenging. The market will likely look for signs of improvement in fresh order inflows and better control over input costs in the upcoming quarterly results to gauge whether this quarter’s performance was an isolated setback or a broader trend.