Thermax Q2 FY27 Earnings Call: Guides Rs. 7,000 Cr+ H2 Revenue, Margins Seen Significantly Better

Thermax Ltd held its Q2 FY27 earnings call on November 05, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Muted Quarter on Shipping Slippage; H2 Weighted Stronger

• Q2 revenue closed barely above Rs.2,800 crore — versus ~Rs.3,100 crore management saw as realistically doable at the start of the quarter; slightly more than Rs.200 crore of shipments slipped from Q2 into Q3 FY 2026-2027 (vs Rs.300 crore deferred from Q1 to Q2).
• CEO Ashish Bhandari called the numbers "nothing special" — but management expressed "huge optimism and positivity" on the backlog and potential across multiple businesses.
• Margin worth over Rs.30 crore sits in deferred items — a chemicals supply order and a cooling equipment order on the water, plus more profitable international projects carried from Q1 to Q2 and pushing into Q3 FY 2026-2027.
• Supply chain normalized by Q2 — Q1's gas shortages are gone and factory manpower shortages at zero; TPWES capacity utilization had fallen substantially in Q1 FY 2026-2027.
• Working capital described as robust — inventory build against export orders is "just a timing issue"; customers have already paid substantial amounts against goods in inventory and in a couple of cases are open to paying storage charges.
• Full-year profitability gap acknowledged — management said it cannot deliver FY 2026-2027 profitability on a percentage basis at FY 2025-2026's level (which it called "also not that great"), but expects to cover a fair amount of the gap.

High Base Dents Q2; Recovery Expected in H2 FY 2026-2027

• Q2 FY 2026-2027 order inflows fell 8% YoY — after Q1 was flat YoY; management attributed the decline to a high base of large international utility boiler orders in Q2 FY 2025-2026 and expects the pickup to show more prominently in Q3 and Q4 FY 2026-2027.
• Management is confident FY 2026-2027 inflows will grow vs FY 2025-2026 — a year in which backlog crossed the Rs.14,000 crore threshold; single-digit vs double-digit growth left open, with double-digit requiring "really big projects" to be actually secured and announced.
• Rs.300 crore industrial products order gap — a small, completely temporary domestic pause in Q2 FY 2026-2027 reversed in October (Q3 FY 2026-2027); management expects the gap recovered in Q3, with a good chunk already received.
• TBWES posted the biggest backlog jump among segments — adding over Rs.2,000 crore of backlog over the last year (through Q2 FY 2026-2027); with current demand the plant is already "practically sold."
• Industrial infra order book up 25%+ — cited by Amit Mahawar (UBS) as largely TBWES; the MD & CEO declined to give a best-case FY 2027-2028 view on the segment's scale and profitability, and provided no bid-to-win ratio or two-year order targets.
• Backlog quality defended — over the last 3+ years (through Q2 FY 2026-2027), nothing taken into the backlog worries management; no repeat of past bad-order mistakes.

H1 Drag from Timing Impacts; H2 FY 2026-2027 Set Up for Recovery

• H2 FY 2026-2027 revenue guided at Rs.7,000 crore+ — a base case assuming the war continues for another couple of months and growth vs the year-ago FY 2025-2026 period; management said it can deliver more and is "extremely bullish" on Q3-Q4, with a substantial profitability impact if achieved.
• H2 margins expected "significantly better" than H1 — which management described as particularly low, with recovery across product lines.
• Industrial Products posted barely 6% profitability in Q1-Q2 FY 2026-2027 — including commodity cost impact; management expects it to "jump to the other side of the mean very quickly" in H2, guiding FY 2026-2027 "much more than" 7% and aspiring to close to 9-10% for the full year.
• Commodity cost impact on industrial products was Rs.10-15 crore in Q2 — the worst quarter; the impact carries into Q3 and a little into Q4 FY 2026-2027 at declining amounts, assuming no further deterioration. Since the war's onset in February 2026, steel plates, pipes and seamless tubes are up 10-15%, with bought-out electrical equipment up substantially and styrene elevated.
• Chemicals absorbed Rs.20-25 crore of commodity impact in H1 FY 2026-2027 — mostly offset by price increases, leaving a net H1 impact of just Rs.2 crore; prices held through October 2026, though Q4 FY 2026-2027 has less clarity — crude swung from 116+ a week before the call to ~90 on the call date.
• Industrial Projects should see an "even bigger jump" in H2 — substantial customer claims/change orders as large projects finish would go "relatively straight to the bottom line"; management withheld a specific number given estimation uncertainty.
• High single-digit margin sustainability affirmed — with management expecting even better than high single-digit for at least Q3-Q4 FY 2026-2027 (period unspecified beyond that).

US Timing Slips, Pipeline Deepens; Product Cycle Accelerates

• Almost every US project now carries at least a 1-3 month delay — driven by US-specific local environmental clearances and approvals from authorities; management framed it as a timing disappointment, not a pipeline problem, with the opportunity pipeline getting "more and more real."
• First US data center shipment slipped to Q3 FY 2026-2027 — earlier expected to ship fully in Q2, with a medium portion now in Q4, driven by delays at the customer's end.
• US order conversion outlook trimmed for FY 2026-2027 — management previously expected 2 US data center orders within FY 2026-2027 and now views closing 1 as more likely, possibly more; it is more pessimistic on timing but more optimistic on opportunity size.
• US cooling and boiler orders expected in hundreds of crores each (period unspecified) — boilers fewer but larger, cooling more numerous; the first US order, already secured, came in slightly north of 20 million and was characterized as small-to-medium.
• India data center cooling momentum — typical India order size Rs.40-100 crore; a cooling order was won in Q2 FY 2026-2027 and another reasonable-size order already closed for Q3 FY 2026-2027.
• New launches in FY 2026-2027 — i-series intelligent boiler launched at Boiler India (first-series addressable market of a few hundred crore, period unspecified, within a heating business of ~Rs.1,500-2,000 crore, period unspecified); new SustainX India cooling range; heat pumps up to 120°C with aspiration to reach 140°C; a gas purification order for one of India's most high-profile green hydrogen projects won in Q2 FY 2026-2027.
• Community boilers seen as a positive — India's largest community boiler provider builds on Thermax boilers, and Thermax can offer such solutions under Tosel but only if 100% green; community boilers seen as the biggest play, with opportunities also in community water and district cooling.

FEPL Losses Persist; CBG Orders Awaited in Q4 FY 2026-2027

• FEPL H2 FY 2026-2027 impact expected similar to or slightly larger than H1 — no specific quantum disclosed; losses in Q1 and Q2 (Q2 a little more than planned) driven by a significantly high-capex Tamil Nadu project that is fully built but awaiting government approvals stopped during the government change.
• Growth partner process for FEPL expected to conclude by Q1 FY 2027-2028 — information memoranda have gone out, due diligence is about to begin, and management expects at least one binding offer before end of FY 2026-2027; management declined to disclose FEPL's megawatt capacity and investment levels, and did not confirm the analyst-referenced 900 MW to 1,000 MW scaling strategy (period unspecified).
• FEPL interest cost affirmed at Rs.120-130 crore for FY 2026-2027 — confirmed by CFO Arunachalam; the analyst calculated ~Rs.55 crore allocated for H1 FY 2026-2027, and a Rs.15 crore impairment in FEPL in Q2 was flagged by Nirmal Bang but not directly addressed.
• Interest cost run-rate "most likely" to repeat for the remainder of FY 2026-2027 — with a recent marginal market interest-rate hike to start reflecting; interest on a few projects coming online in the balance of FY 2026-2027 will be accounted to the P&L, unlike currently where some is capitalized.
• Remaining CBG backlog stands at Rs.130 crore — confirmed by the Group CFO (initially cited as ~Rs.138 crore), largely PGTR and customer retention/change orders on existing plants; no new CBG orders booked in roughly 2.5 years (since the beginning of 2024).
• No CBG orders expected in Q3 FY 2026-2027; bookings expected in Q4 — post-Gobardhan scheme, inquiries have picked up across the board (smaller players evaluating 5/10 ton plants, larger players 15/20 ton), with active discussions underway.
• Tosel performing extremely well — strong pipeline and hitting all its numbers; BioCNG still posting small single-digit (Rs. crore) losses each quarter of FY 2026-2027 so far, declining sequentially; of five PGTRs of concern, three are out and the two remaining rice-straw PGTRs were delayed by monsoons and are expected to go into PGTR imminently.

Boiler-Focused Strategy; Rs.6,000 Cr FY 2027-2028 Reasonable Case

• Rs.100 crore capacity expansion underway at TBWES — debottlenecking ongoing in FY 2026-2027, alongside sub-vendor development across India and shifting bottlenecked work to third parties; management pushed back on the view that TBWES is under-realizing its potential, noting profitability has improved each year.
• At least one more supercritical boiler order expected in FY 2026-2027 with high probability — multiple orders also highly probable; TBWES will not take full EPC projects and will focus only on the boiler, including for supercritical opportunities.
• Diversified application mix to be retained — India thermal, waste-to-energy, cement waste heat recovery, AFRC/CSBC, HRSGs for Middle East & Africa refining and petrochemicals, and power for US data centers; management aims to retain penetration with Middle East oil & gas customers and will not fill the plant with supercritical alone.
• Rs.6,000 crore reasonable case for industrial infra in FY 2027-2028 — comprising Rs.3,000 crore TBWES products, Rs.1,500 crore services and Rs.1,500 crore EPC, with a corresponding profitability mix; the MD & CEO said this previously shared long-term case looks reasonable for FY 2027-2028, with upside and worst-case scenarios also existing.
• Industrial infra volatility to narrow — the MD & CEO said past swings of -1% to +13% are "just not done"; swings will continue but within a much narrower range going forward.
• Legacy large orders being flushed out — the project now closing was ordered in 2019 and is in its eighth year; by end of FY 2026-2027 only the Assam project will retain significant work (engineering complete, only construction remains); practically all FGD projects reach mechanical completion within FY 2026-2027, with only some revenue recognition spilling into the beginning of FY 2027-2028.
• PSI incentive of ~Rs.20 crore booked in Q2 FY 2026-2027 — confirmed by Group CFO Arunachalam (within the Rs.15-20 crore range initially cited by the CEO); management pushed back on framing it as non-recurring, noting it has recurred regularly for the last few years; the Q2 incentive income linked to the industrial infra project pertains to the TBWES business, per CEO Ashish Bhandari.