India's Thermax misses Q1 profit view on weak sales growth, exceptional cost

BENGALURU (Reuters) - India's Thermax on Tuesday posted a smaller-than-expected 1.7% rise in first-quarter profit, dragged by slow sales growth and an exceptional cost due to ongoing litigation.

The company posted a consolidated net profit of 599.5 million rupees ($7.3 million) for the quarter ended June 30, compared to analysts' estimate of 1.04 billion rupees as per Refinitiv data.

However, its profit before tax and exception item stood at 1.42 billion rupees, compared to 814.5 million rupees a year ago.

"The results were adversely impacted due to an exceptional item of provision related to an ongoing litigation of 510 million rupees," the energy solutions provider said in a statement.

The company said it was directed to repair and reinstate two gas turbo generators at a customer's plant, and to pay 1.74 billion rupees with interest along with an additional 9.5 million rupees under a defect liability obligation.

Thermax said it expects an impact of 2.45 billion rupees from the order, and is in the process of challenging the fine.

Revenue from operations rose 16.8% to 19.33 billion rupees, also missing analysts' estimate of 19.81 billion rupees due to weak order bookings.

The company's order book was up 11% at 25.67 billion rupees, significantly slower than the 36% growth it registered in the year-ago period.

However, its revenue from industrial products and industrial infra grew 26.1% and 13.4%, respectively.

Expenses, meanwhile, rose 15.7% to 18.44 billion rupees, led by a 7.2% jump in cost of raw materials.

Shares of Thermax closed 3.2% lower ahead of the results. For the April-June quarter, the stock was up 0.5%.

($1 = 82.2230 Indian rupees)

(Reporting by Anuran Sadhu in Bengaluru; Editing by Varun H K)