E2E Networks Q1 FY27 Results (NSE: E2E)
Signal: Steady quarter
The read
E2E Networks delivered a stellar quarter — revenue tripled YoY to ₹15,676 lakh, gross margin expanded from 60.5% to 85.4%, and the company swung from a loss of ₹284 lakh to a profit of ₹4,388 lakh. The profit inflection is driven by operating leverage as fixed costs (depreciation, employee) grew far slower than revenue, and by a sharp drop in purchase of services as % of revenue. However, finance costs surged 449% YoY and depreciation 121%, reflecting heavy debt-funded capex — a source of risk if revenue growth decelerates. The stock split and BSE main board listing improve liquidity. The subsidiary Sovcloud is yet to commence operations. Overall, a strong fundamental turnaround, but sustainability of margins and debt management need monitoring.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹156.76 Cr | +334% | +64% |
| EBIT | ₹68.68 Cr | N/A | |
| Net profit | ₹43.88 Cr | from loss to profit | |
| EPS | ₹2.14 | from loss to profit | |
| EBIT margin | 43.8% |
P&L walk
Revenue surged 334% YoY to ₹15,676 lakh, with gross margin expanding from 60.5% to 85.4% as purchase of services dropped from 39.5% to 14.6% of revenue. EBITDA margin improved to 82.5%, and net profit turned sharply positive. The improvement is driven by operating leverage as fixed costs (depreciation, employee) grew slower than revenue, though depreciation and finance costs are rising fast on capex build.
Key positives
- Revenue grew 334% YoY and 64% QoQ, reaching ₹15,676 lakh — a clear acceleration from prior quarters.
- Gross margin expanded 24.9pp YoY to 85.4% as purchase of services fell to 14.6% of revenue from 39.5%.
- EBITDA margin improved to 82.5% (up 11.9pp YoY), demonstrating strong operating leverage.
- Net profit turned from a loss of ₹284 lakh to a profit of ₹4,388 lakh, a massive inflection.
Key concerns
- Finance costs surged 449% YoY and 173% QoQ to ₹1,005 lakh, indicating rising debt burden to fund capex.
- Depreciation grew 121% YoY, reflecting heavy capital investment; if revenue growth slows, margin may compress.
- Other income declined 24% YoY to ₹1,142 lakh, though still a significant contributor to net profit.
- The company is in a high-capex phase; any slowdown in revenue growth could pressure profitability.
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