Thermax Bolsters AI-IoT Capabilities with ₹30 Cr Exactspace Acquisition, Signaling Digital Future

Thermax Ltd. (NSE: THERMAX, BSE: 500411), a leading Indian engineering solutions provider, has significantly advanced its digital transformation agenda by acquiring an additional 35.83% stake in Bangalore-based Exactspace Technologies Private Ltd., raising its total ownership to 51% for a cash consideration of ₹30.48 crore. Announced on February 27, 2026, this strategic move converts Exactspace from an associate to a subsidiary, embedding advanced Artificial Intelligence and Industrial Internet of Things (AI-IoT) capabilities directly into Thermax's core offerings and aiming to deliver end-to-end asset support for its industrial clients.

The Catalyst

The global industrial landscape is undergoing a profound digital shift, with India's manufacturing sector keenly embracing AI-IoT for operational efficiencies and predictive intelligence. Thermax's decision to gain a majority stake in Exactspace Technologies is a direct response to this accelerating trend. Exactspace, incorporated in 2017 in Bangalore, specializes in AI-based Industrial IoT solutions, including predictive asset maintenance, process optimization, asset efficiency improvement, and analytics-driven failure analysis for manufacturing customers. Its flagship product, "Pulse®," is an AI-powered Digital Twin Solution designed to enhance operational efficiency through process optimization. By integrating Exactspace’s cutting-edge technology, Thermax aims to strengthen its service-led revenue streams and enhance customer asset performance in an era demanding data-driven operations.

Financial Forensics

The acquisition of a 51% stake in Exactspace Technologies for ₹30.48 crore values the entire AI-IoT firm at approximately ₹60 crore. Exactspace reported a revenue of ₹6.21 crore in FY2025. This implies an acquisition multiple of nearly 10 times its FY2025 revenue, which FinScann analysis notes as a high valuation compared to Thermax's own trailing twelve-month P/E ratio, hovering around 55-57x.

Thermax's recent financial performance for Q3 FY26 (ended December 31, 2025) presents a mixed picture but highlights strong underlying operational momentum. The company reported a significant 80% year-on-year surge in consolidated net profit, reaching ₹205 crore, comfortably surpassing analyst expectations. This profit growth was partly supported by ₹59 crore in exceptional items. Consolidated operating revenue saw a more modest increase of 4% year-on-year to ₹2,635 crore.

A crucial indicator of future growth, Thermax’s order booking, soared by an impressive 34% year-on-year to ₹3,080 crore during Q3 FY26. The consolidated order balance as of December 31, 2025, stood at a robust ₹12,641 crore, reflecting an 11% increase from the previous year and providing strong revenue visibility.

Thermax Ltd. Key Financial Highlights (Q3 FY26)

Metric	Q3 FY26 (₹ Crore)	Growth (YoY)	Citation
Consolidated Net Profit	205	+80%
Consolidated Operating Revenue	2,635	+4%
New Order Bookings	3,080	+34%
Consolidated Order Balance (as of Dec 31, 2025)	12,641	+11%
Exactspace FY25 Revenue	6.21	N/A

Source: Company Filings, FinScann Analysis

---

Market Impact

The immediate market reaction to Thermax’s acquisition announcement, coupled with its Q3 FY26 results, was cautious, with the stock closing down 2.11% on February 27, 2026. While Thermax has demonstrated strong short-to-medium-term bullish momentum leading up to this, its one-year return as of February 27, 2026, was -4.02%. The acquisition, despite its strategic merit, comes with a notable valuation for Exactspace, which could be a point of consideration for investors. However, the long-term impact on Thermax’s stock price could be positive as the company integrates AI-IoT capabilities and taps into India's rapidly expanding Industrial IoT market, which is projected to grow from USD 10.6 Billion in 2025 to USD 30.4 Billion by 2034 at a CAGR of 12.38%. The increasing adoption of AI in the Indian manufacturing sector, with a forecasted market value of $17 billion by 2025, underscores the growth potential this acquisition unlocks for Thermax.

Key Takeaways

• Strategic Digital Leap: Thermax is strategically enhancing its service portfolio and digital capabilities by integrating AI-IoT, positioning itself for future industrial transformation.
• Strong Order Book: A robust Q3 FY26 order booking of ₹3,080 crore and an order balance of ₹12,641 crore provide excellent revenue visibility for Thermax.
• High Acquisition Multiple: The 10x FY25 revenue valuation for Exactspace, while strategic, might warrant investor scrutiny given Thermax's own valuation metrics.
• Addressing Industry 4.0: This acquisition aligns Thermax with the rapidly growing Indian Industrial IoT and AI in manufacturing markets, driven by demand for predictive maintenance and operational efficiency.
• Long-Term Growth Potential: While immediate market reaction was muted, the long-term strategic benefits of integrating advanced digital solutions could drive sustainable growth for Thermax.

Moat Analysis: Leveraging Digital Innovation

In financial analysis, a "moat" refers to a company's sustainable competitive advantage. For Thermax, this acquisition aims to deepen its existing moat by adding a crucial layer of "digital innovation" and "service differentiation." While traditionally strong in energy and environment solutions, the integration of Exactspace's AI-IoT expertise creates an "Investment Play" that allows Thermax to offer more comprehensive, data-driven solutions. This enhances customer stickiness through predictive maintenance and optimized asset management, making it harder for competitors to replicate its full suite of offerings. It shifts Thermax beyond just equipment supply to providing ongoing, value-added digital services.

Q: What is the primary objective of Thermax acquiring a majority stake in Exactspace Technologies? A: The primary objective is to enhance Thermax's capabilities in Artificial Intelligence (AI) and the Industrial Internet of Things (IIoT), enabling it to deliver end-to-end asset support and strengthen its service offerings for manufacturing customers.

Q: What are Exactspace Technologies' core competencies? A: Exactspace Technologies specializes in AI-based Industrial IoT solutions, focusing on predictive asset maintenance, process optimization, asset efficiency improvement, and analytics-driven failure analysis for industrial clients.

Q: How does this acquisition align with the broader market trends in India? A: This acquisition is perfectly aligned with the rapid growth of the Industrial IoT market in India, which is projected to reach USD 30.4 Billion by 2034, driven by increasing industrial automation, demand for predictive maintenance, and government initiatives like Digital India and Make in India.

Q: What was Exactspace Technologies' revenue in FY2025? A: Exactspace Technologies reported a revenue of ₹6.21 crore in the financial year 2025.

Q: Does Thermax have plans for complete ownership of Exactspace in the future? A: Yes, the definitive agreements signed on February 27, 2026, include a strategic provision allowing Thermax to acquire the remaining 49% stake in Exactspace Technologies after a period of three years, subject to specified terms and conditions.

FinScann Verdict

This strategic acquisition by Thermax positions the company firmly at the forefront of India's industrial digital transformation. While the valuation for Exactspace appears stretched based on current revenue multiples, the long-term synergistic benefits of integrating advanced AI-IoT capabilities are substantial. Investors should monitor the execution of this integration and its impact on Thermax's service-led revenue growth and overall operational efficiency.

Disclaimer: For information only; not investment advice. Stock market investments carry risks. Please consult a SEBI-registered advisor before investing. FinScann assumes no liability for decisions made based on this report.