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Weak set of results

* Thermax reported a miss on all parameters in 2QFY26.

* Revenue declined 5% YoY to INR24.7b (vs our est. INR28.9b) mainly due to a 24% YoY decline in industrial infra revenue.

* Gross margin expanded ~230bp YoY and contracted ~360bp QoQ to 47.1%. Lower margins in industrial infra segment led to an overall EBITDA margin contraction of ~360bp YoY to 7.0%, while EBITDA at INR1.7b (-38% YoY) missed our estimate by 38%.

* With a lower margin in industrial infra due to cost overruns and a higherthan-expected tax rate, adj. PAT at INR1.2b declined 40% YoY (33% below our estimate), while PAT margin contracted 280bp YoY to 4.8%.

* Among segments, Industrial Product EBIT margin stood at 9.9% (vs. 10.8% in 2QFY25). Industrial Infra margins decreased to 1.6% from 7.1% in 2QFY25, mainly due to project cost overruns and the absence of oneoff PSI income. Chemical segment EBIT margins were weak at 9.8% (vs. 16.1% YoY), due to higher fixed costs compared to revenue growth, higher input costs, and a change in the product mix. Green Solutions profitability is not comparable as the company now reports segment’s PBT instead of EBIT. Green Solutions PBT margin improved to 6.1% from 1.9% in 2QFY25, aided by operational efficiency and insurance claim proceeds received by one of its subsidiaries.

* 2Q order inflow stood at INR35.5b, up 6% YoY, and the total order book stood at INR123b, up 6% YoY.

* For 1HFY26, revenue/EBITDA/PAT declined by 4%/5%/12% to INR46.2b/INR4.0b/INR2.7b, while margins contracted 10bp YoY to 8.6%.

* For 1HFY26, OCF declined by 88% to INR0.6b and FCF outflow was INR3.3b vs. INR0.2b in 1HFY25.

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