Data Centre Cooling Stock to Buy Now for an Upside of 24%; Recommended by Kotak Securities
This mid-cap stock, engaged in providing engineering solutions in the energy and environment sectors, including boilers, power generation, heating, cooling, water treatment, pollution control equipment, and specialty chemicals for various industrial applications, is in focus after Kotak Securities gave a Buy target of Rs. 4,000, which has an upside potential of 24.03 percent.
With a market capitalization of Rs. 38,980.20 crore, the shares of Thermax Limited were currently trading at Rs. 3,225 per equity share, down nearly 2.55 percent from its previous day’s closing price of Rs. 3,309.50 per equity share.
What is the News?
Kotak Securities, a prominent brokerage firm, has recommended a “Buy” call on Thermax Limited with a target price of Rs. 4,000 per share, indicating an upside potential of 24.03 percent from its current price of Rs. 3,225 per share.
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Rationale for Buy Rating on Thermax Limited
Emerging Businesses to Drive Growth
Thermax’s emerging business segments are expected to accelerate revenue growth, diversify its earnings base, and strengthen long-term growth prospects, supporting improved investor confidence and a potentially higher valuation over time.
US Data Centre Cooling Opportunity
The US data centre market offers a significantly larger opportunity than Thermax’s existing cooling business. Capturing this demand could expand its addressable market, boost order inflows, and create substantial future revenue growth.
Compressed Biogas Investment Revival
Potential government incentives and policy support could revive investments in compressed biogas projects. This may improve project viability, strengthen order inflows, and position Thermax to benefit from India’s growing clean-energy transition.
Hydrogen Business to Unlock Future Value
Thermax’s end-to-end hydrogen solutions could begin contributing revenue from FY2028. As green hydrogen adoption expands, this business may create new revenue streams, diversify earnings, and support long-term valuation growth.
Order Book Details
Thermax reported positive order book performance in Q1 FY27. The company received new orders worth Rs. 2,809 crore, compared with Rs. 2,749 crore in Q1 FY26, registering a 2 percent year-on-year growth.
The total order balance reached Rs. 14,045 crore in Q1 FY27, compared with Rs. 11,376 crore in Q1 FY26, marking a strong 23 percent year-on-year increase. A higher order balance gives the company better visibility for future revenue and reflects a healthy pipeline of projects to be executed in the coming quarters.
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Chemicals contributed 18 percent of the order book, followed by data centres at 17 percent, engineering at 13 percent, metals and mining at 11 percent, and food and beverages at 10 percent. These sectors continue to support demand. Overall, Thermax's order book indicates healthy business momentum and a positive growth outlook.
Thermax's Key Business Developments Across Segments
Thermax's green solutions business is expanding through projects focused on clean energy and lower emissions. TOESL commissioned a 12 TPH biomass boiler in Coimbatore, helping reduce around 11,000 tonnes of CO₂ emissions annually. The company is also working on green power projects in Tamil Nadu and a hybrid power project in Gujarat.
In the chemicals business, Thermax is seeing stable demand for water treatment chemicals. The company achieved an average 14 percent price increase, while new business wins worth Rs. 5 crore in the power segment helped offset lower sales volumes. It is also advancing hydropower projects in India and Nepal.
The industrial products business secured projects in Sri Lanka for steam-driven vapour absorption chillers and supplied a 30 KLD Zero Liquid Discharge solution to an Indian auto component manufacturer. It also commissioned advanced electrostatic precipitator systems for steel plants to help control emissions.
In industrial infrastructure, Thermax secured a CFBC boiler order for a steel project in East India. It also delivered a 60 TPH boiler for the paper industry and commissioned a 4.9 MW biomass-based plant in Thailand. These projects support industrial growth, energy efficiency, and cleaner operations.
Company Overview
Thermax Limited is an Indian multinational engineering company headquartered in Pune, Maharashtra. Established in 1966, the company specializes in sustainable energy and environmental solutions for industrial applications.
The company’s major business segments include Industrial Products, Industrial Infrastructure, Green Solutions, and Chemicals. Thermax provides boilers, heating and cooling systems, power generation solutions, air pollution control equipment, water and wastewater treatment systems, and specialty chemicals.
Recent Quarter Results
Looking at the company's financial highlights, Thermax Limited's revenue has increased from Rs. 2,158 crore in Q1 FY26 to Rs. 2,303 crore in Q1 FY27, which has grown by 6.72 percent. The net profit has decreased by 84.53 percent from Rs. 151 crore in Q1 FY26 to Rs. 22 crore in Q1 FY27. Thermax Limited’s revenue and net profit have grown at a CAGR of 10 percent and 7 percent, respectively, over the last three years.
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In terms of return ratios, the company's ROCE and ROE stand at 13.9 percent and 10.6 percent, respectively. Thermax Limited has an earnings per share (EPS) of Rs. 49.8, and its debt-to-equity ratio is 0.42x.