HLE Glascoat Q2 FY27 Results (NSE: HLEGLAS)
Signal: Margin expansion
The read
The key inflection is sequential margin recovery: consolidated EBITDA margin rose to 11.25% from 7.49% in Q1FY27, but the 1.2% YoY revenue decline and 81.1% fall in H1 operating cash flow show that the recovery is currently mix- and inventory-supported rather than broad-based demand acceleration.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹346.65 Cr | -1.2% | +15.3% |
| EBIT | ₹29.09 Cr | +2.1% | |
| Net profit | ₹16.02 Cr | +14.8% | |
| EPS | ₹2.06 | +17.0% | |
| EBIT margin | 11.25% |
P&L walk
Consolidated revenue declined 1.2% YoY to ₹34,665.42 lakh, but gross margin expanded 757bps to 58.34% on a ₹2,671.72 lakh inventory change benefit; EBITDA rose 5.1% to ₹3,898.71 lakh, while PAT increased 14.8% to ₹1,601.97 lakh.
Segments
Glass Lined Products drove the quarter with revenue of ₹19,539.59 lakh, up 24.2% YoY, and segment result of ₹1,159.02 lakh versus ₹411.51 lakh; Heat Transfer Equipment also turned profitable at ₹684.35 lakh after a ₹406.73 lakh loss sequentially, while Filtration, Drying and Other Equipment revenue fell 25.6% YoY to ₹10,204.07 lakh.
Key positives
- Consolidated EBITDA margin improved to 11.25% from 9.91% a year earlier and 7.49% sequentially, with EBITDA rising 5.1% YoY to ₹3,898.71 lakh despite revenue declining 1.2%.
- Glass Lined Products revenue increased 24.2% YoY to ₹19,539.59 lakh and segment result rose to ₹1,159.02 lakh from ₹411.51 lakh.
- Heat Transfer Equipment returned to a ₹684.35 lakh segment profit from a sequential loss of ₹406.73 lakh.
- Finance costs declined 10.1% YoY to ₹839.01 lakh, supporting the 14.8% increase in consolidated PAT to ₹1,601.97 lakh.
Key concerns
- Consolidated revenue declined 1.2% YoY to ₹34,665.42 lakh, with Filtration, Drying and Other Equipment revenue down 25.6% YoY to ₹10,204.07 lakh.
- Gross-margin expansion to 58.34% was heavily aided by a ₹2,671.72 lakh inventory change; raw-material cost as a percentage of revenue nevertheless rose to 49.36% from 47.78%, and the filing does not disclose the driver of the margin tailwind.
- Employee benefits rose 18.0% YoY to ₹7,291.55 lakh and employee intensity increased to 21.04% of revenue from 17.58%, limiting the conversion of gross-margin gains into operating profit.
- Standalone revenue fell 14.3% YoY to ₹16,549.72 lakh, EBITDA margin contracted 255bps to 8.63%, and standalone PAT declined 43.4% to ₹455.16 lakh.
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