Why is Thermax falling/rising?

Recent Price Movement and Market Context

Thermax’s share price hit a new 52-week low of ₹2,880 during intraday trading on 21-Nov, signalling persistent selling pressure. The stock underperformed its sector, Engineering - Industrial Equipments, which itself declined by 2.25% on the day. The weighted average price indicates that a larger volume of shares traded closer to the day’s low, suggesting that sellers dominated the session. Furthermore, the stock is trading below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, highlighting a bearish technical trend.

Investor participation has also waned, with delivery volumes on 20 Nov falling by 6.52% compared to the five-day average, indicating reduced buying interest. Despite this, liquidity remains adequate for trades up to ₹0.75 crore, ensuring that the stock remains accessible to market participants.

Long-Term Performance and Valuation Challenges

Thermax’s long-term performance has been mixed. Over the past five years, the stock has delivered a robust 243.02% return, significantly outperforming the Sensex’s 94.23% gain. However, more recent periods reveal a stark contrast. Over the last year, the stock has declined by 33.72%, while the Sensex has risen by 10.47%. Year-to-date, Thermax is down 29.13%, compared to the Sensex’s 9.08% gain. This underperformance extends to shorter time frames as well, with the stock falling 10.27% in the past month and nearly 4% in the last week, while the benchmark index has posted modest gains.

Valuation metrics further complicate the outlook. The company’s return on equity (ROE) stands at 11.8%, and it trades at a price-to-book value of 6.8, indicating a relatively expensive valuation. While the stock’s valuation is in line with historical averages for its peers, the combination of high valuation and recent profit declines raises concerns among investors.

Financial Results and Operational Concerns

Thermax’s recent quarterly results have been a key factor weighing on the stock. The company reported a 39.3% decline in profit after tax (PAT) for the quarter ended September 2025, with PAT falling to ₹119.66 crore. Additionally, the return on capital employed (ROCE) for the half-year period is at a low 14.05%, signalling reduced efficiency in capital utilisation. The debt-to-equity ratio, which had been negligible on average, rose to 0.36 times in the half-year, indicating increased leverage that may concern risk-averse investors.

Profitability has also been under pressure, with profits falling by 7.9% over the past year. This decline, coupled with the stock’s negative returns, suggests that the company is facing operational headwinds that have yet to be fully resolved.

Sector Position and Institutional Interest

Despite these challenges, Thermax remains the largest company in its sector by market capitalisation, valued at ₹35,318 crore, representing 19.22% of the entire Engineering - Industrial Equipments sector. Its annual sales of ₹10,224.12 crore account for nearly 16% of the industry’s total, underscoring its significant market presence. The company also benefits from a high level of institutional ownership at 27.39%, which typically reflects confidence from sophisticated investors who have the resources to analyse fundamentals thoroughly.

Conclusion: Why Thermax Is Falling

The decline in Thermax’s share price on 21-Nov and over recent months can be attributed to a combination of disappointing quarterly earnings, deteriorating profitability metrics, and a valuation that appears stretched relative to recent performance. The stock’s consistent underperformance against the Sensex and its sector peers, coupled with technical weakness and reduced investor participation, has intensified selling pressure. While the company’s strong market position and institutional backing provide some support, these factors have not been sufficient to offset concerns about earnings declines and operational challenges.

Investors should closely monitor upcoming quarterly results and sector trends to assess whether Thermax can regain momentum or if the current downtrend will persist. For those seeking alternatives, tools that evaluate fundamentals and momentum may offer better investment opportunities within the midcap heavy electrical equipment space.

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