THERMAX Q3 FY26 earnings call.
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Revenue
₹2,635 Cr
verified against source
Revenue YoY
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EBITDA
Pending
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What the record says.
Thermax Q3 FY26 earnings call reflected mixed performance with management acknowledging the quarter was "okay, not great" on revenue and profitability. The Chemicals segment remains under pressure, running approximately INR 50 crore off last year's PBT due to INR 30 crore of incremental costs from the new plant and weak volumes—management targets returning to 13-14% EBITDA from current low-single-digit levels. Industrial Products showed strong revenue but margin compression due to unfavorable product mix (heating growing slower than Enviro/water), though cooling product wins in data centers (one domestic, one international) offer structural upside. International orders were robust at INR 1,400+ crore for the quarter with Dangote being less than INR 600 crore. Industrial Infra continues to carry legacy project burdens (BioCNG/FGD/NRL) but management expects these to resolve by Q2 next year. Commodity price increases in copper and steel pose margin risk. The company maintains a strong pipeline in power (subcritical/supercritical/captive), with decision-making expected in late FY26/early FY27. Green Solutions (FEPL) executing 5 projects with 250 MW addition this year, targeting 700 MW in FY27 and 1.1 GW in FY28. Data center cooling represents a new application with unique IP, though management kept specifics confidential.
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Guidance to track
- Management expects Q4 to deliver double-digit revenue growth quarter-over-quarter, with backlog substantially better in quantity and quality, though full-year FY26 will not achieve double-digit YoY revenue growth.
- Chemicals business targeting 13-14% EBITDA margins, recovering from current depressed levels, with North American market share losses reversing starting Q4 and continuing into next year.
- TBSPL BioCNG projects to convert from loss to profit in Q4/Q1; FGD and NRL issues to fully resolve by Q2 FY27, leaving only NRL to close out next year.
- Management signals upcoming capacity and CapEx investments in cooling business and TBWES in the coming year, citing potential capacity constraints before demand issues.
Risks flagged
- Chemicals business remains significantly under pressure with INR 50 crore PBT shortfall versus last year, driven by new plant costs and Chinese competition impacting base business. Management admits volume growth has not materialized despite expectations.
- Rising copper and steel prices create margin pressure in the projects business. Management acknowledges residual commodity risk exposure despite hedging efforts and notes they are now tracking commodity impacts more carefully after a period of complacency.
- Q3 revenue underperformed due to customer delays extending into October, with management admitting they were 'barely 1% ahead' versus last year. Multiple project categories (BioCNG, FGD, NRL) continue to face execution challenges.
- Analyst questions on data center TAM and product specifics were deflected. Management declined to share product details or competitive positioning, citing competitive reasons, making it difficult to verify the opportunity size or competitive dynamics.
Key quotes
- This quarter was okay, not great because on revenue and profitability, we should have done better.
- In our estimate, at least for the next year, we are off from the 17% profitability that Chemicals was at. We are right now closer to trying to get the business to 13%-14% EBITDA.
- I suspect, both in TBWES, and in cooling, in this coming year, we will be talking about increasing capacity and CapEx investments.
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