THERMAX Q3 FY25 earnings call.
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Revenue
₹2,529 Cr
verified against source
Revenue YoY
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EBITDA
Pending
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What the record says.
Thermax reported a difficult Q3 FY25 with results below expectations, primarily due to execution challenges in Industrial Infrastructure segment. The company experienced INR 500 crore revenue deferral with ~INR 60+ crore profitability impact from uncleared backlog, though this was largely cleared by early January. Project execution issues persisted with FGD (Maithon project took INR 16 crore hit), TBWES (INR 14 crore loss on HRRL project), and Bio-CNG (INR 12 crore loss). The Income Tax Department reversed a INR 21 crore interest payment received earlier. Management expects Q4 to be strong with revenues and orders north of INR 3,000 crore and profitability above 10%. The order pipeline for large projects is at its highest in three years, providing confidence for FY26. Domestic Industrial Products segment showed 40% order book growth and 30% backlog growth. Exports are expected to be a key growth driver with INR 2,000-3,500 crore potential. Risks include Bio-CNG economics requiring government support, project business base cost challenges, and macroeconomic headwinds affecting private CapEx.
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Guidance to track
- Management expects Q4 to deliver revenues and orders exceeding INR 3,000 crore each, with profitability expected north of 10%. This guidance comes after a difficult Q3 where INR 500 crore revenue was deferred.
- Project business profitability is expected to cross 5% next year from current 1-2% level, contingent on securing INR 250-300 crore quarterly project inflows to cover INR 80-100 crore base costs.
- Company expects to start taking new Bio-CNG orders again in the second half of FY26 after current plant stabilization and technology understanding are completed. Only one Bio-CNG order taken this entire year.
- Exports expected to be in the INR 2,000-3,500 crore range going forward, representing 25-30% of total revenue. Q3 was one of the highest export quarters ever.
Risks flagged
- Gas output at Bio-CNG plants is between 50-75% of theoretical maximum due to feedstock conversion issues. While Thermax claims top quartile performance, the economics require government intervention on pricing, carbon credits, fertilizer subsidies, and pipeline infrastructure.
- The company carries INR 80-100 crore annual base costs in the project business. With zero large project orders for several quarters, these costs are not covered. Need INR 250-300 crore quarterly inflows to break even on base costs alone.
- Private capital expenditure remains below expectations, particularly in the ethanol sector where financing is not completing on time. This impacts base order growth which was only in single digits.
- Board retreat identified global trade wars, currency fluctuations, and potential macroeconomic slowdown as concerns for the Products segment which has delivered strong growth through macro tailwinds.
Key quotes
- It was a difficult quarter, and the results were below our expectations. There were times in the quarter where we knew it was going to be tough, but the end result had some things that were surprising to me as well from a miss point of view.
- In our estimate for next year, we have taken that in the second half of next year, we will start to take orders again. The industry makes a lot of sense for the country. But in the last six months, you would have seen nobody has made moves on any of their bigger projects because nobody can see how the economics will work given where things are.
- The reason it is expensed and the reason it should be expensed is that we chose to take these in as orders, and we are executing them through as orders. The reverse was to invest it as R&D... but if we have this against a customer order, then it's fair that it should get expensed.
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