THERMAX Q2 FY25 earnings call.
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Revenue
₹2,616 Cr
verified against source
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EBITDA
Pending
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What the record says.
Thermax's Q2 FY25 call centered on strategic portfolio decisions rather than financial performance disclosure. The most significant announcement was the board's decision to exit large supercritical project tenders (INR 4,000-6,000 crore scope) citing execution risk concerns, as historical government projects failed to deliver profitability. The Botswana boiler order (four large boilers + Balance of Plant) was accepted at reasonable but dilutive margins, representing the Large Boiler business's typical profile. Industrial Infrastructure segment margins remain under pressure from legacy FGD projects, though management expects improvement as the least profitable projects complete execution by next year. Bio-CNG continues to disappoint on plant performance versus commitments, prompting conservative order-taking stance despite bullish long-term market outlook. FEPL's renewable energy expansion is progressing—200 MW operational, 100 MW under construction, targeting 600 MW by FY25 and 1 GW by FY28. Chemicals shows order momentum at INR 200 crore/quarter with continued M&A intent. Hydrogen electrolyzer development remains on track with INR 100 crore 18-month investment planned for 100-300 MW initial capacity.
Colored figures show movement against the previous available record.
Guidance to track
- FEPL currently has 200 MW operational plus 100 MW under construction. Board approved INR 700 crore equity investment for 600 MW target. Subsequent phase to scale to 1 GW by FY27-28.
- Dedicated team developing first hydrogen electrolyzer product for India market, targeting September 2025 product release. Initial manufacturing capacity planned at 100-300 MW range.
- Management expects Q3 and Q4 profitability to improve sequentially as the least profitable FGD projects complete execution and exit the project pipeline. The most challenging FGD project is in its final execution phase.
- No new orders being taken in near term pending resolution of plant performance issues. Medium-to-long-term outlook remains positive given large market pipeline and expected government policy improvements for sector viability.
Risks flagged
- Despite interventions improving some sites, management admits no plant has reached full committed performance. Current plant performance remains below customer commitments, limiting new order acceptance. This represents ongoing execution risk and potential reputational/contractual exposure.
- Q2 Industrial Infra segment PBIT of INR 70 crore included INR 66 crore production incentive from Maharashtra government—without which margins would have been significantly depressed. The last unprofitable FGD project is completing but claim recovery remains uncertain.
- Board decision to not bid on INR 4,000-6,000 crore supercritical tenders in current form eliminates a potential large revenue pipeline. Management cited historical inability to make money on government projects. This creates medium-term revenue growth uncertainty for Industrial Infra segment if smaller pipeline doesn't compensate.
- Industrial Products' most profitable segment (small boilers) has experienced demand slowdown due to ethanol sector weakness. Management acknowledged this but expects recovery. International growth partially offsets domestic weakness but at different margin profile.
Key quotes
- In the form that the tenders are currently out, which means we are talking about single large orders of INR 4,000-6,000 crores in nature to be executed over multiple years with civil construction, all of that is not Thermax's play, and Thermax will not bid for those projects in the current form that exists.
- In my understanding, not just Thermax, nobody in the sector so far has been able to deliver a plant entirely to the commitments with which those plants were set up.
- We are willing to take technology risk, but the development of the project somewhere needs to happen. We continue to look at that space, but it's getting to the end of the rope, in my opinion.
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