Thermax Q3 Results Review: Motilal Oswal Maintains 'Sell' Rating On The Stock, Lowers Target Price— Here's Why

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Motilal Oswal Report

Thermax Ltd’s Q3 FY25 results came in below our estimates, impacted by lower than-expected revenue booking and cost overruns. Revenue grew by 8% YoY, whereas PAT declined by 19% YoY as Ebitda margin contracted to 7.5%. Margins were impacted by cost overruns in FGD projects in Industrial Infra, floods in Chennai impacting Green Solutions segment margins, and increased costs incurred for expanding the scope of work in Chemicals.

Order inflows declined by 8% YoY, mainly led by a sharp decline in domestic order inflows due to delays in enquiry finalizations across base industries. Thermax expects a revival in inflows and execution in Q4 FY25 and expects enquiry finalization in FY26 for large sectors.

We cut our estimates by 9%/13%/13% for FY25/FY26/FY27 to factor in weak inflows, execution and margins. We maintain Sell with a target price of Rs 3,350, based on core business valuation at 42 times Mar’27E EPS and the addition of subsidiary valuations.

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