Thermax expects stronger Q3 orders and better margins soon

THERMAX expects a significant improvement in order inflows during Q3 FY27, along with stronger operating margins. Management indicated that margins could remain at improved levels for at least the next couple of quarters. The company expects revenue to exceed ₹7,000 crore between Q3 and Q4 FY27, which management believes could have a substantial impact on profitability. During Q2, higher commodity costs and shipping constraints affected the company's Industrial Products order book. Shipping-related challenges had a particularly significant impact on this segment. However, management expects business momentum to improve in the coming quarters. Another positive development is the good uptick in the electric cooling products business, which could provide an additional growth opportunity. From a fundamental perspective, improving order inflows, better margins and higher revenue expectations could support earnings growth. Margin improvement is particularly important because stronger profitability alongside revenue expansion can improve operating leverage. However, these are management expectations rather than confirmed financial results. Actual performance will depend on order conversion, commodity prices, shipping conditions and execution. My View: Thermax's outlook is encouraging, with management expecting stronger Q3 orders, significantly better margins and revenue exceeding ₹7,000 crore across Q3-Q4. The expected margin improvement over the next couple of quarters is an important positive trigger. Investors should monitor actual order inflows and quarterly profitability. What to watch: Q3 order book growth and new contract wins. Sustainability of improved EBITDA margins. Revenue performance across Q3 and Q4. Industrial Products recovery and shipping conditions. Growth in electric cooling products. Stance: THERMAX – POSITIVE (8/10