Thermax Q2 profit drops 5% as margins face pressure

Thermax THERMAX reported an 11 percent year-on-year increase in consolidated revenue to Rs 2,756 crore for the second quarter, while consolidated profit after tax declined 5 percent to Rs 114.5 crore, missing market expectations. This earnings miss matters because profitability came under pressure from a combination of rising raw material costs, an adverse product mix in Industrial Products, and execution delays. Specifically, steel prices rose 10 to 15 percent during the quarter, alongside higher costs for copper-related components and crude-linked products. Order inflows also dipped 8 percent to Rs 3,259 crore due to deferred orders in Industrial Products. While the headline numbers focus on the quarterly profit dip and softer bookings, they miss the broader context of revenue visibility. The overall order backlog remains healthy at Rs 14,250 crore, which is 1.4 times revenue and up 16 percent year-on-year. Furthermore, management expects a strong recovery in the second half of the year, with H2 revenue projected to exceed Rs 7,000 crore as deferred shipments normalise and legacy loss-making projects wind down. At around 40 times estimated FY28 earnings, valuations have moderated. However, a stock re-rating depends entirely on whether execution can catch up with the order backlog and whether high-single-digit margins can be sustained against lingering commodity cost pressures. Green Solutions also remains a near-term drag that warrants caution. View: Equal-weight. Watch for execution recovery and margin stability in H2.