01 — At a Glance
The Order Book Looks Fab. The Execution? Lumpy.
- Q3 Revenue₹2,635 Cr
- Q3 PAT₹205 Cr
- Q3 EPS₹17.14
- Annualised EPS (Q3×4)₹68.56
- Order Booking (Q3)₹3,080 Cr
- Order Book (Latest)₹12,641 Cr
- YoY Revenue+4.19%
- YoY Profit+40.63%
- Book Value₹424
- Price / Book7.25x
Opening Observation: Thermax posted Q3 revenue of ₹2,635 crore with PAT of ₹205 crore — a 40.6% profit jump YoY, but much of it is accounting magic (provision reversals worth ₹51 crore from litigation). Strip that out, and the core profit story is much quieter. The order book at ₹12,641 crore is solid. The Dangote order for ₹580 crore landed in November. Data centre cooling wins are real. But execution in Industrial Products margins is sub-par, the Chemicals segment is bleeding ₹48 crore YoY against last year, and management is spending like they’re preparing for wars that haven’t been declared yet. This is a company with good bones and terrible paint. The stock at 57.1x P/E is pricing in perfection.
02 — Introduction
Welcome to Thermax: Order Growth Meets Margin Depression
Thermax is not boring. It’s complicated. The company operates across four business segments: Industrial Products (boilers, chillers, heating, cooling equipment — 40% revenue), Industrial Infra (large EPC projects for power, refineries, bio-CNG, FGD — 47% revenue), Green Solutions (renewable energy, green hydrogen build-own-operate — 7% revenue), and Chemicals (ion exchange resins, performance chemicals, construction chemicals — 6% revenue).
For most of FY25, the stock was a hero — up 13% over 3 years, delivering what looked like a textbook infrastructure play riding the capex supercycle. Then Q2 FY26 happened, and suddenly everyone realised Thermax wasn’t a simple multiple-expansion story. It was an order book story with execution risk, margin compression in the core business, a bleeding Chemicals division, and management making billion-rupee bets on adjacencies like data centre cooling and green hydrogen — neither of which is materialising at scale yet.
Q3 FY26 results (Dec 2025) show the company maintaining its order momentum (₹12,641 crore order book, up from ₹11,593 crore in H1). But revenue growth has slowed to 4.2% YoY, profit volatility is high (thanks to one-time items), and execution remains uneven. Management is bullish on Q4 (expecting “double digit better than last year in revenue”). We’ll see.
This article breaks down the numbers, the segment-wise chaos, the data centre bet, and what management isn’t saying explicitly in the earnings call. Because in capital-intensive businesses, what they’re NOT saying is often more important than what they are.
03 — Business Model: 9-Month Manufacturing + Project Risk
You Order It. We Build It. Hope It Ships On Time.
Thermax operates a project-based manufacturing business. A customer (cement plant owner, refinery, power utility, metallurgy company) places an order. Thermax engineers it, manufactures it (across 14 global manufacturing units), delivers it, commissions it. Typical project timeline: 12–22 months. Repeat at scale.
The model works when execution is smooth. Order inflow > execution = order book growth = future revenue. But project businesses are like soufflés — one wrong move and the whole thing collapses. Thermax has historically struggled with mega-projects (they’ve had FGD projects, bio-CNG losses, NRL debacles). Management is now “selective” (their word) about which projects to take. Translation: they’re running scared.
Industrial Products is smaller, faster-turning, higher-margin. You make small boilers and chiller units, sell through distributors, earn 20%+ EBITDA margins. Green and easy. But it’s growing slower than Industrial Infra because it doesn’t move the needle on a ₹36,000 crore market cap. So management is trying to spice it up with data centre cooling — a product they’ve been developing for 1.5 years and which they absolutely refuse to describe in detail because “competitive reasons.” (Translation: it probably doesn’t exist yet at scale.)
The Chemicals segment is in free fall. It grew 130% between FY22 and FY24, but CY25 brought Chinese imports, margin erosion, and a new manufacturing plant that’s underutilised. Management now admits Chemicals will earn 13–14% EBITDA next year instead of the historical 17%.
💬 If a data centre cooling product is so proprietary, why hasn’t Thermax shipped more than two orders yet? Are they undershooting demand or are orders just hard to come by? Drop your take in the comments.
04 — Financials Overview
Q3 FY26: The Numbers Are Not What They Seem
Result type: Quarterly Results | Q3 FY26 EPS: ₹17.14 | Annualised EPS (Q3×4): ₹68.56 | 9M FY26 TTM annualised approach shows full-year complexity.
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 2,635 | 2,529 | 2,474 | +4.19% | +6.51% |
| Operating Profit | 255 | 188 | 172 | +35.6% | +48.3% |
| OPM % | 10% | 7% | 7% | +300 bps | +300 bps |
| PAT (Core) | 154 | 114 | 119 | +35% | +29% |
| EPS (₹) | 17.14 | 9.73 | 10.04 | +76.2% | +70.6% |
The Asterisk: Reported PAT is ₹205 crore. But ₹51 crore is from litigation provision reversal (a Bombay High Court ruling on Dec 9, 2025 set aside an arbitral award, so Thermax got back a deposit). Strip that, and core PAT is ₹154 crore. The operating margin jumped to 10% from 7% YoY, but that’s partly mix (more profitable orders being executed) and partly timing. The EPS math is clean: ₹17.14 per share × 4 quarters = ₹68.56 annualised. vs. FY25’s full-year EPS of ₹53.25. If Q4 delivers 20%+ growth, annualised FY26 EPS could hit ₹70+, but management is guiding conservatively. Annualised P/E at current price (₹3,071) ÷ ₹68.56 ≈ 44.8x. Still expensive.
05 — Valuation: Fair Value Range
Expensive Growth or Expensive Chaos? Pick One.
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