Thermax margin drops to 2.98% as costs outpace revenue
Consolidated Q1FY27 net profit fell 85.61% YoY; other income exceeded pre-tax profit and the tax rate rose 19.91 percentage points.
Filed 30 Jul 2026, 16:08 IST · after market close · Thermax Ltd (THERMAX)
Key takeaways
- Thermax's consolidated operating margin fell 7.49 percentage points year on year to 2.98% as expenses grew +16.05% against revenue growth of +7.09%.
- Consolidated net profit dropped 85.61% YoY to Rs 21.79 cr, while the 48.29% tax rate and other income equal to 161.82% of pre-tax profit weakened earnings quality.
- Q1FY27 operating margin was 11.66 percentage points below the 14.64% median of 31 reported Industrials peers.
Price around the results
Revenue growth did not translate into operating profit
Consolidated revenue rose +7.09% YoY, but expenses increased +16.05%, cutting operating profit by 69.52%. Sequentially, revenue fell 32.83% and operating profit fell 81.67%, with costs declining only 26.84%; operating margin therefore narrowed 7.94 percentage points to 2.98%.
Other income and tax rate made profit quality weaker
Other income was 161.82% of reported pre-tax profit, indicating that operating earnings did not cover the full pre-tax result. The tax rate rose 19.91 percentage points YoY and 21.44 percentage points QoQ to 48.29%, while interest expense rose 16.39% YoY and depreciation increased 21.77%.
Margin reversal leaves Thermax near the bottom of its peer set
The margin had improved from 6.95% in Q2FY26 to 10.92% in Q4FY26 before falling to 2.98% in Q1FY27, so the latest result is a sharp reversal rather than a third straight quarterly decline. Thermax's margin was 11.66 percentage points below the 14.64% median for 31 reported Industrials peers and ranked second from the bottom.
Results came after market close
The consolidated results were filed after market close, so there is no immediate market reaction to assess here. Across the last eight results, the stock rose after four and fell after four, with a median absolute move of 3.78%.
Q1FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,303 cr | ₹3,428 cr | -32.83% | +7.09% |
| Other income | ₹68 cr | ₹56 cr | +21.38% | +4.19% |
| Expenses | ₹2,234 cr | ₹3,054 cr | -26.84% | +16.05% |
| Operating profit | ₹69 cr | ₹374 cr | -81.67% | -69.52% |
| Operating margin (%) | 2.98% | 10.92% | — | — |
| Interest | ₹35 cr | ₹42 cr | -17.00% | +16.39% |
| Depreciation | ₹60 cr | ₹54 cr | +10.20% | +21.77% |
| Profit before tax | ₹42 cr | ₹334 cr | -87.39% | -80.07% |
| Tax | ₹20 cr | ₹90 cr | -77.32% | -66.09% |
| Net profit | ₹22 cr | ₹244 cr | -91.08% | -85.61% |
| EPS (₹) | ₹2.24 | ₹21.68 | -89.67% | -83.44% |
Operating margin of 2.98% compares with a Industrials sector median of 14.64% across 31 peers that have reported Q1FY27.
What to watch
- Whether operating margin recovers from 2.98% after reaching 10.92% in Q4FY26.
- Whether expenses continue to grow faster than revenue, following the +16.05% versus +7.09% YoY gap.
- Whether the tax rate moves below 48.29% and other income remains a large share of pre-tax profit.