Thermax's margin rebounds sequentially, but profit slips year on year
Revenue grew 11.40% YoY, but higher depreciation, interest and tax rate offset operating-profit growth.
Filed 05 Nov 2026, 18:02 IST · after market close · Thermax Ltd (THERMAX)
Key takeaways
- Thermax's consolidated operating margin rose 4.06 percentage points sequentially to 7.04% as revenue growth outpaced expense growth.
- Net profit fell 5.27% year on year even as operating profit grew 12.85%, with depreciation up 36.29% and interest up 14.77%.
- Other income contributed 48.44% of pre-tax profit, while the 7.04% margin was 4.47 percentage points below the Industrials peer median.
Price around the results
Sequential margin rebound remains below recent peaks
In consolidated results, revenue grew 19.68% sequentially while expenses rose 14.66%, lifting operating margin by 4.06 percentage points to 7.04%. This reverses the fall to 2.98% in Q1FY27, but the margin remains below 10.92% in Q4FY26. The sequential improvement reflects better operating leverage rather than a reduction in expenses.
Depreciation and interest weighed on year-on-year profit
Year on year, revenue and expenses grew at similar rates of 11.40% and 11.29%, allowing operating profit to rise 12.85%. Profit before tax nevertheless fell 2.77% as depreciation increased 36.29% and interest rose 14.77%. The tax rate also increased by 1.77 percentage points to 33.02%, while other income represented 48.44% of pre-tax profit, making reported profit materially dependent on non-operating income.
Margin trails Industrials peers as orders shift to Q3
Thermax's 7.04% operating margin was 4.47 percentage points below the 11.51% median for 160 Industrials peers that have reported, placing it 26th from the bottom. Management said Industrial Products order booking declined because major orders were deferred to Q3. Management also said the Bhutan ferro-alloys project, involving a 1 × 18 MVA furnace, is targeted for completion within 18 months.
New boiler range broadens the product offering
Management said Thermax launched the Thermax-i range of intelligent boilers and heaters, which continuously adjusts performance as operating conditions change. The presentation identified UltraPac-i as the first product in the range and described it as a biomass-fired boiler designed to anticipate changes in fuel characteristics. These are company initiatives, rather than evidence of a change already visible in the quarter's margin.
No immediate market reaction after the late filing
The consolidated results were filed after market close, so there is no post-result market move to assess yet. After the eight recent result dates, the stock rose five times and fell three times, with a median absolute move of 3.36%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,756 cr | ₹2,303 cr | +19.68% | +11.40% |
| Other income | ₹82 cr | ₹68 cr | +19.94% | -4.09% |
| Expenses | ₹2,562 cr | ₹2,234 cr | +14.66% | +11.29% |
| Operating profit | ₹194 cr | ₹69 cr | +182.92% | +12.85% |
| Operating margin (%) | 7.04% | 2.98% | — | — |
| Interest | ₹37 cr | ₹35 cr | +5.04% | +14.77% |
| Depreciation | ₹70 cr | ₹60 cr | +17.86% | +36.29% |
| Profit before tax | ₹169 cr | ₹42 cr | +300.71% | -2.77% |
| Tax | ₹56 cr | ₹20 cr | +173.96% | +2.73% |
| Net profit | ₹113 cr | ₹22 cr | +419.09% | -5.27% |
| EPS (₹) | ₹10.17 | ₹2.24 | +354.02% | -4.24% |
Operating margin of 7.04% compares with a Industrials sector median of 11.51% across 160 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- WETEX 2026 enabled customer and partner engagement across the MENA region and opened collaboration opportunities.
Expansion
- A Bhutan ferro-alloys project covering a 1 × 18 MVA furnace is targeted for completion within 18 months.
New products
- UltraPac-i is Thermax’s first Thermax-i product and a biomass-fired boiler designed to anticipate fuel variations.
New initiatives
- Thermax launched the Thermax-i series of intelligent boilers and heaters that continuously optimise performance.
- Thermax introduced REDD, a digital mascot and customer companion, under the One in Red initiative.
Problems & risks
- Industrial Products order booking declined primarily because major orders were deferred to Q3.
What to watch
- Whether operating margin holds above 7.04% after the sequential rebound from 2.98%.
- Whether deferred Industrial Products orders appear in Q3, as management said major orders had shifted there.
- Whether other income remains near 48.44% of pre-tax profit.