HP Adhesives Q2 FY27 Results (NSE: HPAL)
Signal: Margin pressure
The read
The post-fire recovery is visible in revenue, which rose 16.7% YoY to ₹7,592.83 lakh and returned PAT to ₹28.49 lakh from a Q1 loss, but this is a weak recovery: gross margin compressed 903bps YoY to 31.05%, EBITDA margin fell 593bps to 3.86%, finance costs rose 98.2%, and operating cash flow was negative ₹1,677.55 lakh in H1FY27. This is the fourth consecutive quarter of YoY EBITDA-margin contraction in the recent series, so the key inflection remains margin repair rather than topline recovery.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹75.93 Cr | +16.7% | +19.7% |
| EBIT | ₹1.63 Cr | -66.8% | |
| Net profit | ₹0.28 Cr | -91.9% | |
| EPS | ₹0.03 | -92.1% | |
| EBIT margin | 3.86% |
P&L walk
Revenue recovered to ₹7,592.83 lakh, +16.7% YoY and +19.7% QoQ, but gross margin fell to 31.05% from 40.08% as raw-material cost rose to 72.36% of revenue; EBITDA margin consequently fell to 3.86% from 9.79% and PAT was ₹28.49 lakh, down 91.9% YoY.
Segments
The Group reports only one segment, Adhesives & Sealants Products; the consolidated result was only ₹5.08 lakh above standalone PAT, so the wholly owned subsidiary did not materially change the quarter's trajectory.
Key positives
- Consolidated revenue increased 16.7% YoY to ₹7,592.83 lakh and 19.7% QoQ, reversing the Q1FY27 decline of 4.0% YoY.
- PAT returned to a profit of ₹28.49 lakh from a ₹90.55 lakh Q1 loss, helped by a negative tax expense of ₹45.74 lakh.
- Employee benefits expenses rose only 2.1% YoY to ₹983.46 lakh while revenue rose 16.7%, and other expenses rose 10.2% YoY to ₹1,081.64 lakh, indicating cost growth below topline growth.
Key concerns
- Gross margin compressed 903bps YoY to 31.05% as raw-material cost rose to 72.36% of revenue from 56.89%; the filing does not disclose the cause, leaving pricing pass-through and input-cost risk unresolved.
- EBITDA fell 54.0% YoY to ₹292.66 lakh and EBITDA margin declined 593bps to 3.86%, marking the fourth consecutive quarter of YoY margin contraction in the recent series.
- Finance costs increased 98.2% YoY to ₹124.81 lakh while borrowings rose to ₹2,558.06 lakh from ₹325.53 lakh at March 31, 2026.
- Operating cash flow was negative ₹1,677.55 lakh in H1FY27 versus positive ₹1,097.04 lakh in H1FY26, with inventories rising to ₹6,903.75 lakh and receivables to ₹4,131.34 lakh.
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