Thermax Gets Buy Call From Kotak, Sets Rs 4,000 Target

Thermax Limited is in focus after Kotak Securities assigned a Buy rating and a target price of Rs 4,000 per share, implying a potential upside of 24.03% from the reference price of Rs 3,225. The brokerage's view rests on growth opportunities in data centre cooling, emerging businesses and hydrogen solutions.

The engineering company is also seeing growth in its order balance. Thermax reported an order balance of Rs 14,045 crore in the first quarter of FY27, up 23% year on year. However, its net profit fell sharply to Rs 22 crore from Rs 151 crore in the same quarter of the previous financial year.

These figures present two different aspects of the business. The order balance points to demand for future project execution, while the fall in profit raises questions about near term earnings performance.

Thermax share price and Kotak Securities target

Kotak Securities has set a target price of Rs 4,000 for Thermax, against the reference share price of Rs 3,225. The stock was reported to be down 2.55% from its previous close of Rs 3,309.50. The company's market capitalisation stood at Rs 38,980.20 crore.

Particulars	Details
Company	Thermax Limited
Brokerage	Kotak Securities
Rating	Buy
Target price	Rs 4,000
Reference share price	Rs 3,225
Potential upside	24.03%
Previous closing price	Rs 3,309.50
Market capitalisation	Rs 38,980.20 crore

The 24.03% upside is calculated from the reference price of Rs 3,225 to the target of Rs 4,000. It is a brokerage estimate, not a guaranteed return. Actual share price movements will depend on business performance and market conditions.

Why Kotak Securities sees growth opportunities in Thermax

Kotak Securities has identified several business areas that could support Thermax's growth over the coming years. One is data centre cooling in the United States, where the brokerage sees a larger addressable market than Thermax's existing cooling business. Winning more projects in this segment could increase orders and contribute to future revenue.

The brokerage also expects Thermax's emerging businesses to support revenue growth and diversify its earnings. These activities could reduce the company's dependence on established segments over time, although the source does not quantify their expected contribution to revenue or profit.

Another area is compressed biogas. Potential government incentives and policy support could encourage fresh investment in these projects. If investment activity improves, Thermax may benefit through new orders for relevant engineering and energy solutions.

Hydrogen is another longer term opportunity. Thermax has end to end hydrogen solutions, and the business could begin contributing revenue from FY2028. The pace of adoption and the conversion of opportunities into orders will determine how much this segment contributes to future financial performance.

These growth opportunities have different timelines. Data centre cooling could support demand as projects are won, while hydrogen revenue is expected to begin from FY2028. The source does not provide specific revenue targets for either business.

Thermax order book rises 23% in Q1 FY27

Thermax's order balance increased to Rs 14,045 crore in Q1 FY27 from Rs 11,376 crore in Q1 FY26, a year on year rise of 23%. New orders during the quarter reached Rs 2,809 crore, compared with Rs 2,749 crore a year earlier, representing growth of about 2%.

Order book metric	Q1 FY26	Q1 FY27	Change
New orders	Rs 2,749 crore	Rs 2,809 crore	About 2% growth
Total order balance	Rs 11,376 crore	Rs 14,045 crore	23% growth

The order balance reflects projects that remain to be executed. Its growth gives Thermax visibility into potential future business activity, but it does not mean the entire amount will be recognised as revenue in the same quarter. Execution schedules, project milestones and the timing of customer orders can affect when sales are recorded.

The mix of orders also shows that demand comes from several industries. Chemicals accounted for 18% of the order book, followed by data centres at 17%, engineering at 13%, metals and mining at 11%, and food and beverages at 10%. This spread gives the company exposure to multiple industrial applications.

Business developments across Thermax segments

Thermax's green solutions business is working on projects related to cleaner energy and lower emissions. TOESL commissioned a 12 tonnes per hour biomass boiler in Coimbatore. The project is expected to help reduce about 11,000 tonnes of carbon dioxide emissions annually. The company is also working on green power projects in Tamil Nadu and a hybrid power project in Gujarat.

In chemicals, demand for water treatment chemicals remained stable. Thermax achieved an average price increase of 14%, while new business wins worth Rs 5 crore in the power segment helped offset lower sales volumes. The company is also advancing hydropower projects in India and Nepal.

The industrial products segment secured projects in Sri Lanka involving steam driven vapour absorption chillers. It also supplied a 30 kilolitres per day Zero Liquid Discharge solution to an Indian auto component manufacturer. The segment commissioned electrostatic precipitator systems for steel plants to control industrial emissions.

In industrial infrastructure, Thermax secured an order for a circulating fluidised bed combustion boiler for a steel project in eastern India. It also delivered a 60 tonnes per hour boiler for the paper industry and commissioned a 4.9 MW biomass based plant in Thailand.

These projects show the range of applications covered by Thermax, including industrial heating, cooling, water treatment and power generation. Their financial contribution will depend on project execution and revenue recognition.

Thermax financial results show a sharp profit fall

Thermax's revenue rose 6.72% year on year to Rs 2,303 crore in Q1 FY27 from Rs 2,158 crore in Q1 FY26. Net profit, however, fell 84.53% to Rs 22 crore from Rs 151 crore.

Financial metric	Q1 FY26	Q1 FY27	Change
Revenue	Rs 2,158 crore	Rs 2,303 crore	6.72% growth
Net profit	Rs 151 crore	Rs 22 crore	84.53% fall

The divergence between revenue and profit is important. Higher revenue indicates that sales increased, but the sharp fall in net profit shows that this growth did not translate into higher earnings during the quarter. The supplied information does not specify the reasons for the profit decline, so its causes cannot be established from these figures alone.

Over the previous three years, Thermax's revenue and net profit recorded compound annual growth rates of 10% and 7%, respectively, as stated in the source material. Its reported return on capital employed stood at 13.9%, while return on equity was 10.6%. Earnings per share was Rs 49.80, and the debt to equity ratio was 0.42 times.

What investors should watch

The brokerage target and the order book offer different measures of Thermax's prospects. The target price reflects Kotak Securities' assessment, while the order balance indicates the value of outstanding business. Neither removes the need to track the company's actual financial performance.

Investors will be watching these developments in upcoming quarters:

• Whether revenue growth continues and net profit recovers from Rs 22 crore.
• Whether the order balance converts into revenue through timely project execution.
• Whether data centre cooling and emerging businesses generate meaningful new orders.
• Whether the hydrogen business starts contributing revenue from FY2028.
• Whether compressed biogas investment improves with potential policy support.

The company's performance will also need to be assessed against its longer term growth rates and reported return ratios. The difference between revenue growth and profit growth in Q1 FY27 makes earnings performance particularly relevant to future assessments.

For context on other engineering and industrial stocks, WeloMoney has covered an engineering stock's sharp share price rise and a separate brokerage view on Hindustan Aeronautics. These cases involve different businesses and should not be treated as direct comparisons with Thermax.

About Thermax Limited

Thermax Limited is an engineering company headquartered in Pune, Maharashtra, and established in 1966. It provides industrial solutions across energy and environmental applications. Its business areas include industrial products, industrial infrastructure, green solutions and chemicals.

Its products and services cover boilers, heating and cooling systems, power generation, air pollution control, water and wastewater treatment, and specialty chemicals. The company's order book spans industrial sectors, including chemicals, data centres, metals and mining, and food and beverages.

The next developments to watch are Thermax's quarterly earnings, conversion of outstanding orders into revenue, and progress in data centre cooling and hydrogen solutions. These factors will help show whether the growth opportunities identified by Kotak Securities translate into stronger financial performance.

Frequently asked questions

What is Kotak Securities' target price for Thermax?

Kotak Securities has assigned Thermax Limited a Buy rating with a target price of Rs 4,000 per share. Against the reference price of Rs 3,225, this implies a potential upside of 24.03%. The target is a brokerage estimate, not a guaranteed return.

Why is Thermax stock in focus?

Thermax is in focus because of Kotak Securities' target price of Rs 4,000 and growth opportunities in data centre cooling, hydrogen and compressed biogas. Its order balance also increased 23% year on year to Rs 14,045 crore in Q1 FY27. However, net profit fell to Rs 22 crore during the quarter.

What was Thermax's revenue in Q1 FY27?

Thermax reported revenue of Rs 2,303 crore in Q1 FY27, up 6.72% from Rs 2,158 crore in Q1 FY26. Despite higher revenue, net profit fell from Rs 151 crore to Rs 22 crore, a decline of 84.53%.

What was Thermax's order book in Q1 FY27?

Thermax's total order balance stood at Rs 14,045 crore in Q1 FY27, compared with Rs 11,376 crore in Q1 FY26. This represented year on year growth of 23%. New orders during the quarter were Rs 2,809 crore, up about 2% from Rs 2,749 crore a year earlier.

When could Thermax's hydrogen business start generating revenue?

Thermax's hydrogen business could begin contributing revenue from FY2028. The company has end to end hydrogen solutions, but the supplied information does not specify the expected revenue contribution or the scale of future orders.

What are Thermax's main growth opportunities?

Thermax's growth opportunities include US data centre cooling, emerging businesses, compressed biogas projects and hydrogen solutions. Potential government incentives could support compressed biogas investment, while hydrogen revenue could begin from FY2028. The scale of these opportunities will depend on project wins and execution.