Thermax shares extend Friday’s losses; JPMorgan upgrades on attractive risk-reward

Shares of Thermax Ltd. were trading 2% lower on Monday, November 9, even as brokerages turned more constructive on the company’s outlook following its September quarter (Q2FY27) performance. JPMorgan upgraded the stock to ‘Overweight’, while Jefferies maintained its ‘Buy’ rating but lowered its price target.

On a consolidated basis, Thermax reported a 4.2% year-on-year decline in net profit to ₹115 crore in Q2FY27, compared with ₹120 crore in the corresponding quarter of the previous fiscal year.

Revenue for the quarter increased 11.4% year-on-year to ₹2,756 crore from ₹2,474 crore a year earlier. Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 12.8% to ₹194 crore, compared with ₹172 crore in the year-ago period.

EBITDA margin remained broadly stable at 7%, against 6.9% in Q2FY26. However, the company’s earnings missed analyst estimates.

Thermax attributed the pressure on profitability to higher input costs and an unfavourable product mix in its Industrial Products segment. The company also recognised an additional impairment provision of ₹15 crore in its Green Solutions segment.

Brokerage firm JPMorgan has upgraded Thermax to ‘Overweight’ from its earlier rating, with a price target of ₹3,491 per share.

The brokerage said that the stock has corrected around 50% from its June peak, reflecting the company’s weaker first-half FY27 earnings performance. However, it believes margin pressures are beginning to bottom out, with EBITDA margin recovering to 7% in Q2FY27 from 3% in the preceding quarter.

While order inflows during the first and second quarters have been volatile, JPMorgan said that Thermax is competing for several large orders.

The brokerage believes the combination of improving earnings prospects, a strong order backlog and potential improvement in order inflows makes the stock’s risk-reward profile attractive at current levels.

Meanwhile, Jefferies has maintained its ‘Buy’ recommendation on Thermax but lowered its price target to ₹4,020 per share.

The brokerage highlighted that order inflows during the first half of FY27 declined 4% year-on-year. However, the company remains confident of a recovery in order inflows in the second half.

Thermax’s order book has increased 16% year-on-year, providing revenue visibility for FY27-FY29, Jefferies noted.

The brokerage has cut its earnings per share (EPS) estimates by 22% for FY27 and by 1-17% for FY28-FY30. Despite the downward revisions, it expects margins to improve going forward.