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Operational efficiency leads to beat on EBITDA and PAT

* Thermax’s 1QFY26 EBITDA/PAT grew 60.0%/38%/YoY, whereas revenue declined 2% YoY.

* Thermax’s revenue of INR21.5b (-2% YoY) (MOFSL est. INR24.4b) was partly driven by delayed customer clearance and execution challenges.

* Gross margin expanded ~730bp QoQ and ~700bp YoY to 50.7%. Higher margins in the Industrial Infra segment led to an overall EBITDA margin expansion of ~400bp YoY to 10.5%, while EBITDA at INR2.3b (+59% YoY) beat our estimate by 12%.

* With a better operational performance and higher other income (25% above our estimate), adj. PAT at INR1.5b increased 38% YoY and was 19% above our estimates, while PAT margin expanded 200bp YoY to 7.0%.

* Revenue growth remained broadly flat across all segments.

* Segment-wise, the Industrial Infra segment’s EBIT margin remained strong, expanding to 8.0% in 1QFY26 vs -2.0% in 1QFY25, mainly due to income from the Package Scheme of Incentives (PSI). EBIT margin for the Industrial Product segment stood at 8.1% (vs 9.0% in 1QFY25). The Chemical segment’s EBIT margin was weak at 9.3% (vs 17.8%YoY). On the PBT level, Green Solutions’ PBT margin expanded to 5.1% in 1QFY26 vs 3.3% in 1QFY25.

* Order inflow for the quarter stood at INR27.5b, marking a 7% YoY increase, and the overall order book stood at INR113.8b, rising 7% YoY.

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