Thermax Limited Just Missed EPS By 30%: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Thermax Limited (NSE:THERMAX) released its second-quarter result to the market. The early response was not positive, with shares down 8.8% to ₹2,840 in the past week. Statutory earnings per share fell badly short of expectations, coming in at ₹10.16, some 30% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at ₹28b. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

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Taking into account the latest results, the consensus forecast from Thermax's 19 analysts is for revenues of ₹120.3b in 2027. This reflects a notable 8.2% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to decrease 2.7% to ₹50.81 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹121.4b and earnings per share (EPS) of ₹60.65 in 2027. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

Check out our latest analysis for Thermax

It might be a surprise to learn that the consensus price target fell 5.7% to ₹4,167, with the analysts clearly linking lower forecast earnings to the performance of the stock price. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Thermax analyst has a price target of ₹5,325 per share, while the most pessimistic values it at ₹3,000. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Thermax's past performance and to peers in the same industry. The analysts are definitely expecting Thermax's growth to accelerate, with the forecast 17% annualised growth to the end of 2027 ranking favourably alongside historical growth of 12% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 13% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Thermax is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Thermax's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Thermax going out to 2029, and you can see them free on our platform here.

You still need to take note of risks, for example - Thermax has 2 warning signs we think you should be aware of.

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