Beaten-down stocks Part 3: Why Thermax may be worth buying at current level

India’s equity market has slipped after two straight years of strong double-digit growth. The benchmark BSE Sensex dropped 4.8 per cent in the 12 months ended September 2025, marking its weakest annual performance in over a decade. This contrasts with a 28.1 per cent gain in the previous year and a 14.6 per cent rise in the year before that. With this, the Sensex has recorded negative returns in three of the past six years ended September.

 

The recent correction has, however, helped cool equity valuations from the record highs of 2024. Many blue-chip stocks are now trading at more reasonable levels, offering opportunities for long-term investors to enter. Even so, caution is warranted, as valuations across the broader market continue to hover above historical averages, making stock selection crucial.

 

 

In this environment, the multinational engineering company Thermax has stood out. Its share price has slumped 37.9 per cent over the past year, but the stock combines relatively low valuations with earnings stability in recent quarters and a healthy return on net worth of 13.6 per cent. This balance provides investors with downside protection in the current market and the possibility of gains once sentiment improves. 

 

Why buy Thermax? 

• Sharp correction: The Thermax stock has dropped 37.9 per cent in the trailing 12 months to September, underperforming the BSE Sensex, which is down just 4.8 per cent.
• Earnings resilience: In Q1FY26, net sales fell 1.6 per cent year-on-year, but net profit grew 31.6 per cent year-on-year, highlighting margin strength despite muted topline growth.
• Valuation reset: The stock’s valuation has eased from record levels. Its PE multiple has declined to 56.2x from 100.3x a year ago, and its P/BV ratio has fallen to 9.5x from 17.2x. Still, valuations remain relatively high versus the broader market.
• Growth outlook: Analysts see gradual price recovery, supported by Thermax’s strong positioning in energy transition and decarbonisation. The management has guided for 10-11 per cent revenue CAGR over the next five years.

 

 

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