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Thermax Limited — Q4 FY26 earnings call

Call held 8 May 2026

Management summary

Thermax reported a Q4 FY26 with improved revenue execution and a robust order book, including a significant INR 1,600 crore supercritical project. While the overall order balance is 27% higher YoY, the company faced challenges from a project cost overrun in its First Energy business and an increase in working capital due to project delays. Management expressed optimism for future growth driven by green energy solutions and a strong pipeline, but remains cautious regarding raw material price volatility and geopolitical impacts on Q1 FY27 margins.

Highlights

Q4 FY26 revenue and execution of jobs resonated better than prior quarters, aligning with plans.
Booked a supercritical job worth approximately INR 1,600 crores, contributing to a robust order book for the quarter.
The overall order balance is 27% better than the prior period closing, providing a strong foundation for future revenue growth.
The Thermax Onsite Energy Solutions business, focusing on biomass-based heating, delivered stable and strong performance.
Margins for new cooling and supercritical orders are reported as good and stable, meeting internal target profiles.

Concerns

The First Energy business experienced a cost overrun on a project in the South due to contractor failure, impacting Q4 results.
Working capital increased this quarter, primarily caused by project delays and associated collection delays on receivables.
Raw material price increases (steel, styrene, copper, nickel) are anticipated to pose a challenge for Q1 FY27.
The Chemicals business is facing challenges with raw material supply disturbances and price increases.
A potential impact from the prolonging war in Q2 and Q3 FY27 is a cautious outlook for various industries.

What they filed

Q1 FY27: revenue up 6.7%, net profit down 85.4% against the same quarter last year.

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	2,616	2,529	3,046	2,158	2,474 −5%	2,635 +4%	3,428 +13%	2,303 +7%
Expenses	2,338	2,340	2,747	1,933	2,302	2,380	3,054	2,234
EBITDA	278	188	300	225	172 −38%	255 +36%	374 +25%	69 −69%
Margin	11%	7%	10%	10%	7%	10%	11%	3%
Other income	60	32	78	66	85	121	56	68
Interest	29	29	31	30	32	34	42	35
Depreciation	42	35	45	49	51	53	54	60
Profit before tax	266	156	301	211	174 −35%	289 +85%	334 +11%	42 −80%
Tax rate	26%	27%	32%	28%	31%	29%	27%	48%
Net profit	198	114	206	151	119 −40%	205 +80%	244 +18%	22 −85%
EPS	16.54	9.73	17.27	12.79	10.04	17.14	20.50	2.12

How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Order book

high confidence

Inflow this quarter

₹1,600 Cr

Execution

Supercritical order: 40-45 months. Other large orders: 16-18 months.

Composition

Middle East (Industrial Infra) (geography) ₹450 Cr

Pipeline

deal pipeline tcv

Good pipeline in traditional sectors (steel, cement, power, oil & gas), Industrial Infra, Industrial Products (pharma, chemicals, FMCG), heating, water treatment, air pollution control. Data center opportunity for boilers in Q1 FY27.

The order book outlook is robust with a strong pipeline across domestic and international fronts, particularly in traditional sectors and green solutions, despite some cautiousness regarding geopolitical impacts.

Source: Prepared remarks

Capital allocation

high confidence

Capex ₹250 Cr
- Regular capex ₹100 Cr
- Capacity expansion in boiler and cooling facilities ₹150 Cr
I think that you will have a regular capex of about INR 100 crores, INR 150 crores of regular capex that we would be doing. Apart from this, I think we have a few capex that we have planned on some bit of capacity expansion in our boiler facility as well as in our cooling facilities. ... put together, the number would roughly be about INR 250 crores.

Guidance & targets

Revenue

Revenue growth opportunity from order balance Revenue · Next year (FY27) · Medium confidence Better, good numbers

the order balance, which is about 27% better than the prior period closing, gives us a better opportunity in terms of posting better, good numbers on the revenue front.

— Rajendran Arunachalam

Capacity

Green Solutions capacity on ground Capacity · FY27 · Medium confidence Much better than 250 MW

From 250 MW today

FY27 we would probably, close much better than this number.

— Rajendran Arunachalam

Working Capital

Resolution of overdues Working Capital · Next couple of quarters · Medium confidence Resolved

I'll be hopeful that we should resolve all the overdues in one quarter. But yes, the business reality is, I'm sure that we would be able to work it over the next couple of quarters.

— Rajendran Arunachalam

Margins

Industrial Products margin maintenance Margins · Q1 FY27 · Medium confidence Maintain margin numbers and volume

We're doing our best in that regard, and we are hopeful that we should be able to maintain our margin numbers and the volume that we have planned out for quarter one.

— Rajendran Arunachalam

What to watch in Q1 FY27

Working Capital Improvement

Next couple of quarters

Current Increased due to project and collection delays

Target Resolution of overdues and better numbers

Why it matters

Improvement in working capital is crucial for the company's cash flow and operational efficiency.

we are focusing on this in the coming quarters to get back to better numbers for working capital and would remain a focus. ... we would be able to work it over the next couple of quarters.

Risks & concerns

Geopolitical conflict impact on business
medium

Prolonging war could impact various industries domestically and internationally in Q2, Q3 FY27.

Management acknowledged
Project execution delays and site challenges
medium

Site challenges and delays across customer sites on civil and other places have been a cost for revenue performance.

Management acknowledged
Raw material price volatility
medium

Price increases in commodities (steel, styrene, copper, nickel) are a challenge for Q1 FY27.

Management acknowledged
Raw material supply and price issues for Chemicals business
medium

Key raw materials like styrene, water treatment, and construction chemicals faced supply disturbances and price increases.

Management acknowledged
Slowdown in FGD and Bio-CNG order book
medium

Order book for FGD and Bio-CNG businesses has been less than expectations, indicating some slowdown.

Management acknowledged
Contractor failure in First Energy project
low

One contractor failed to perform, leading to cost overruns on a project in the South, impacting Q4 results.

Management acknowledged

Q&A highlights

5 direct, 2 evasive

Data center cooling solution capacity in megawatts Evasive

Mohit, I think I can get back to you on that. I don't have it offhand. We will share that with you separately.

Management could not provide a key metric for a new growth area, indicating early stages or lack of detailed public disclosure.

Asked by Mohit Kumar

Losses in Green Solutions segment Direct

The challenge has been on the First Energy business of ours. We've had one challenge on a project that we are executing down south where one of the contractors has failed to perform as per the contractual terms. And that has forced us to step in and complete the contract or continue execution of that contract. And so there's been a cost overrun on that account...

Provided a specific reason for margin pressure in a segment, highlighting project execution risks with third-party contractors.

Asked by Mohit Kumar

Impact of raw material headwinds on Q4 margins and Q1 FY27 outlook Direct

I think the impact came quite, because of the war sometime in the month of March, by which time procurement for the quarter had all been completed, and the execution was in progress. So I think the price increases that we have seen in commodities across from steel to styrene to our copper, nickel, etc. I think for all of them, we have seen the price movement for sure. You're aware of them as well. That is a bit of a challenge for us in this quarter.

Clarified that Q4 was largely unaffected by RM prices due to procurement timing, but Q1 FY27 will face challenges, indicating potential margin pressure ahead.

Asked by Aditya Mongia

Commercial viability and government support for coal gasification Direct

While we haven't won any in the recent past, but we're sure that you know in terms of government coming in to support some of this – is something that we would definitely look forward to.

Highlighted that despite technology readiness, commercial viability and government support are crucial for coal gasification projects to take off.

Asked by Pulkit Patni

Working capital build-up and resolution timeline Direct

This has been caused by some project delays and, hence, the related collection delays on some of our receivables as well. ... we are focusing on this in the coming quarters to get back to better numbers for working capital and would remain a focus. ... we would be able to work it over the next couple of quarters.

Addressed the reason for increased working capital and provided a timeline for its resolution, which is critical for cash flow management.

Asked by Priyankar Biswas

TBWES (subsidiary) order book, revenue, and margin for FY26 Evasive

you'll like to wait for it as you know that this is a separate subsidiary and a 100% subsidiary, so its financials will be available in the public space, and I think you should wait for it.

Management declined to provide specific financial details for a key subsidiary, indicating a lack of transparency on its standalone performance during the call.

Asked by Priyankar Biswas

Capacity and pipeline for large boiler orders Partial

I don't have that number, sorry. This particular one, I don't have at this time to share.

Management could not quantify the pipeline for large boiler orders, a key indicator for future growth in a significant segment.

Asked by Shirom Kapur

Domestic Industrial Infra order inflows and slowdown in FGD/Bio-CNG Direct

FGD, you're aware of, we've been speaking about it for the last one or two years or more, I think on the dry down of orders on that front. Bio-CNG business I think has also been less on orders, but I think in the recent past we won some change orders, with our existing clients. ... some bit of slowdown and Bio-CNG business order book has also been not as per our expectations.

Acknowledged a slowdown in order inflows for specific green segments (FGD, Bio-CNG) within Industrial Infra, impacting overall expectations.

Asked by Aditya Mongia

3 min read 6 chapters

Detailed narrative

Q4 FY26 Performance and Order Book Overview

Thermax reported a Q4 FY26 with improved revenue and execution, aligning with its plans. The company booked a significant supercritical job worth approximately INR 1,600 crores, contributing to a robust order book. The overall order balance stands 27% better than the prior period closing, providing a strong foundation for future revenue opportunities. Management noted a 'reasonably robust' order book for the quarter, even excluding the large supercritical project.

Green Solutions Segment Challenges and Outlook

While the Thermax Onsite Energy Solutions (biomass-based heating) business performed well, the First Energy business (wind and solar hybrid) faced a cost overrun on a project in the South. This was due to a contractor's failure to perform, forcing Thermax to step in and complete the contract, leading to unexpected costs that impacted Q4 results. Despite this, the company has approximately 250 MW of green solutions capacity on the ground, with plans to commission more projects in Gujarat and the South in the next two to three quarters, aiming for a 'much better' number by FY27.

Raw Material Headwinds and Margin Management

The company indicated that raw material price increases across commodities like steel, styrene, copper, and nickel did not significantly impact Q4 FY26 margins, as procurement for the quarter was completed before the full impact of March's war-related price movements. However, these price increases are expected to pose a challenge for Q1 FY27. Management is focused on maintaining margin numbers and planned volumes for the Industrial Products business, while the Chemicals business is already experiencing raw material supply disturbances and price increases.

Data Center Opportunity and Capacity Expansion

Thermax sees a robust and interesting opportunity in the data center market, both internationally and domestically, for cooling and boiler solutions. The company secured its first set of cooling orders in Q3 FY26 and is confident about a potential boiler supply opportunity for a data center in Q1 FY27. To support anticipated growth, Thermax plans a regular capex of INR 100-150 crores for FY27, along with additional capacity expansion in its boiler and cooling facilities, totaling roughly INR 250 crores for the year.

Working Capital and Execution Timelines

Working capital saw an increase in Q4 FY26, primarily attributed to project delays and subsequent collection delays on receivables, including retentions across several large orders. Management is actively focusing on improving working capital in the coming quarters, aiming to resolve overdues within one to two quarters. Large projects, such as the supercritical order, have extended execution timelines of 40-45 months, while other significant orders are expected to be executed over 16-18 months.

Strategic Outlook and Geopolitical Risks

Thermax maintains a positive outlook on its order pipeline, particularly in green energy solutions like coal gasification and Bio-CNG, hoping for government support to enhance commercial viability. However, the company remains cautious about the potential impact of a prolonged war on various industries in Q2 and Q3 FY27. Despite some slowdown in FGD and Bio-CNG order books, management is optimistic about future opportunities in these segments and is committed to protecting margins on large EPC projects.

This is an AI-generated summary of a publicly available earnings call transcript.

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