Energy and environment solutions company Thermax reported an 86% year-on-year decline in net profit to Rs 22 crore for the June quarter, primarily due to a cost overrun in one of its projects. However, revenue for the quarter grew by 7%, reaching Rs 2,303 crore.
One-Time Impact
The company attributed this drop in profit to an increase of Rs 91 crore in the estimated costs needed to complete a specific project within the industrial infrastructure segment. The profitability of the industrial products segment was also affected by lower export sales and rising input costs. Ashish Bhandari, the managing director of Thermax, noted that this project, which began in 2022, involved significant civil and construction components and is currently in its final year of execution. He expects this to be a one-time impact, with improvements anticipated from the second quarter onwards.
The first quarter proved particularly challenging; however, Bhandari is optimistic that the remainder of the year will be more promising, bolstered by a healthy pipeline of enquiries. He mentioned that during the quarter, customers were unable to accept equipment worth around Rs 300 crore that was already manufactured and ready for delivery, so this revenue could not be recognised. Regarding rising costs, Bhandari stated that the pressure is expected to ease, as some of the price increases have already been incorporated into new orders.
One-Time Impact
As of the end of the quarter, the order backlog stood at Rs 14,045 crore, up 23%. Order bookings for the quarter were Rs 2,809 crore, up by 2%. The company secured an order worth Rs 400 crore for supplying boiler pressure parts for a data centre project in the USA. Additionally, order bookings in the Green Solutions Segment rose, attributed to improved order inflow at TOESL, a utility business.
Thermax has outlined expansion plans for its large boilers, chemicals, water, and cooling businesses. In its solar and wind division, FEPL, the company is exploring strategic investments.
On a standalone basis, Thermax reported a loss of Rs 18 crore compared to a profit of Rs 47 crore in the corresponding quarter.
The Thermax standalone revenue stood at Rs 1,303 crore. Order booking for the quarter declined by 8%, to Rs 1,606 crore, while order backlog stood at Rs 6,576 crore, a 2% increase.