Arfin India Q2 FY27 Results (NSE: ARFIN)
Signal: Margin pressure
The read
The trajectory is a top-line acceleration but a margin reset: consolidated revenue rose 121.3% YoY to 28317.99 lakh, yet gross margin compressed 758bps to 10.97% and derived EBITDA margin fell 258bps to 4.72%, reversing the prior-quarter 4.77% margin only marginally; PAT growth to 596.93 lakh was helped by lower finance-cost intensity and a favourable tax comparison, not by gross-margin expansion.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹283.18 Cr | +121.3% | +33.1% |
| EBIT | ₹12.15 Cr | +47.0% | |
| Net profit | ₹5.97 Cr | +143.2% | |
| EPS | ₹0.35 | +133.3% | |
| EBIT margin | 4.72% |
P&L walk
Consolidated revenue accelerated to 28317.99 lakh, +121.3% YoY and +33.1% QoQ, but gross margin compressed to 10.97% from 18.55% as material costs and inventory movements absorbed the growth; PAT still rose to 596.93 lakh, +143.2% YoY, helped by operating scale and lower finance-cost intensity.
Segments
The company reports one segment, manufacturing and trading of ferrous and non-ferrous metals; the subsidiary contributed 1265.85 lakh of revenue and 88.87 lakh of PAT, lifting consolidated PAT to 596.93 lakh from standalone PAT of 562.22 lakh.
Key positives
- Revenue reached 28317.99 lakh, up 121.3% YoY and 33.1% QoQ, with growth outpacing the 93.2% YoY increase in material cost, indicating partial pass-through.
- Derived EBITDA grew 43.0% YoY to 1336.18 lakh despite a 258bps margin contraction, as employee and other operating costs grew materially slower than revenue.
- Finance cost was broadly flat YoY at 507.04 lakh, reducing finance-cost intensity to 1.79% from 3.98%.
- Operating cash flow rose to 3246.63 lakh in H1FY27 from 2247.47 lakh in H1FY26, while net debt declined 2729.92 lakh to 10196.68 lakh.
- Consolidated PAT of 596.93 lakh exceeded standalone PAT of 562.22 lakh, with the subsidiary contributing 88.87 lakh of PAT.
Key concerns
- Gross margin compressed 758bps YoY to 10.97%, the dominant P&L headwind, with material cost plus inventory adjustment at 89.05% of revenue versus 81.44% a year ago; the filing does not disclose the cause.
- Derived EBITDA margin fell 258bps YoY to 4.72% despite 121.3% revenue growth, showing that input-cost pressure absorbed much of the operating benefit from scale.
- Inventories increased to 24684.12 lakh from 22281.75 lakh and trade receivables rose to 5467.12 lakh from 3022.19 lakh, creating a significant working-capital funding requirement.
- H1 capex and CWIP additions were only 273.73 lakh versus 1858.96 lakh in H1FY26, while PPE declined slightly to 7378.51 lakh, suggesting limited near-term capacity expansion disclosed in the filing.
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