Eco Recyc. Q2 FY27 Results (NSE: ECORECO)
Signal: Margin expansion
The read
The quarter marks a margin inflection after three consecutive quarters of YoY OPM contraction: consolidated EBITDA margin expanded 660bps YoY to 56.46% as material-related costs fell to 34.4% of revenue from 42.3%, but the earnings trajectory remains volatile because PAT fell 18.3% QoQ when other income swung from 294 lakh to a 77 lakh loss.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹16.42 Cr | +13.9% | +1.4% |
| EBIT | ₹8.69 Cr | +26.1% | |
| Net profit | ₹7.49 Cr | +33.8% | |
| EPS | ₹3.98 | +34.0% | |
| EBIT margin | 56.46% |
P&L walk
Consolidated revenue was 1,642 lakh, +13.9% YoY and +1.4% QoQ; gross margin expanded to 65.6% from 57.7% as material-related costs fell to 34.4% of revenue from 42.3%, while EBITDA margin rose to 56.46% from 49.86%; PAT reached 749 lakh, +33.8% YoY but -18.3% QoQ after other income moved from 294 lakh to a 77 lakh loss.
Segments
The company reports one e-waste management segment, but subsidiaries materially lifted the group in H1: Ecoreco Enviro Education and Ecoreco Park contributed 224.74 lakh of net profit, with consolidated H1 PAT of 1,665 lakh versus standalone PAT of 1,439 lakh.
Key positives
- Consolidated revenue reached 1,642 lakh, +13.9% YoY and +1.4% QoQ, reversing the prior quarter's softer operating momentum.
- Gross margin expanded approximately 790bps YoY to 65.6% as material-related costs declined to 34.4% of revenue from 42.3%; the filing does not disclose the cause, so persistence remains unproven.
- Consolidated EBITDA rose 28.9% YoY to 927 lakh and EBITDA margin expanded 660bps to 56.46%.
- H1 operating cash flow was 1,129 lakh versus 203 lakh a year earlier, while consolidated cash and equivalents stood at 1,020 lakh against 522 lakh of borrowings and lease liabilities.
Key concerns
- PAT declined 18.3% QoQ to 749 lakh despite revenue growth because other income swung from 294 lakh to a 77 lakh loss, making reported earnings sensitive to non-operating items.
- The margin tailwind is not yet confirmed as structural: this is the first YoY gross-margin expansion in the available recent series after three consecutive quarters of contraction, and the filing does not identify the driver.
- Depreciation rose 93.3% YoY to 58 lakh while PP&E was broadly flat at 5,345 lakh versus 5,337 lakh, requiring monitoring of asset additions and depreciation matching.
Research and educational content only. Not investment advice.