Honeywell Auto Q2 FY27 Results (NSE: HONAUT)
Signal: Margin expansion
The read
The key inflection is a 329bps YoY gross-margin expansion to 40.4%, which lifted operating EBIT 17.8% to ₹1,550 million despite only 6.5% revenue growth; however, the operating margin fell 160bps QoQ to 13.9% and H1 operating cash flow dropped 82.4% to ₹425 million, leaving the durability of the margin benefit and cash conversion as the main trajectory questions.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹1,223.9 Cr | +6.5% | +1.6% |
| EBIT | ₹155 Cr | +17.8% | |
| Net profit | ₹133.7 Cr | +11.9% | |
| EPS | ₹151.17 | +11.9% | |
| EBIT margin | 13.9% |
P&L walk
Revenue increased 6.5% YoY to ₹12,239 million, while gross margin expanded 329bps to 40.4% and operating EBIT rose 17.8% to ₹1,550 million; PAT growth of 11.9% to ₹1,337 million was partly moderated by higher tax and employee-cost intensity.
Key positives
- Revenue increased 6.5% YoY to ₹12,239 million while operating EBIT increased 17.8% to ₹1,550 million, supported by a 329bps gross-margin expansion to 40.4%.
- Materials, purchases and inventory changes declined to 59.6% of revenue from 62.9% YoY, providing the main disclosed margin tailwind; the filing does not identify the precise cause.
- Finance costs fell 22.7% YoY to ₹17 million, and EPS rose 11.9% to ₹151.17 without dilution.
Key concerns
- Operating margin declined 160bps QoQ to 13.9% despite revenue increasing 1.6% QoQ, indicating sequential moderation after the gross-margin benefit.
- Employee benefits rose 12.7% YoY to ₹2,272 million, faster than revenue growth of 6.5%, limiting the evidence for sustained fixed-cost absorption.
- H1 operating cash flow fell 82.4% YoY to ₹425 million versus PAT of ₹2,844 million, with inventories increasing to ₹2,647 million from ₹2,168 million.
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