Kansai Nerolac Q2 FY27 Results (NSE: KANSAINER)
Signal: Margin pressure
The read
The trajectory inflected negatively after Q1FY27's 14% operating margin: Q2FY27 revenue accelerated 18.6% YoY, but gross margin contracted 516bps to 30.1% as raw material cost reached 69.7% of revenue, driving EBITDA margin down 130bps to 9.7% and leaving PAT growth at 8.0%.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹2,317.38 Cr | +18.6% | -2.4% |
| EBIT | ₹160.92 Cr | -1.2% | |
| Net profit | ₹143.99 Cr | +8.0% | |
| EPS | ₹1.81 | +8.4% | |
| EBIT margin | 9.7% |
P&L walk
Revenue increased to ₹2317.38 Cr, +18.6% YoY but -2.4% QoQ, while gross margin fell to 30.1% from 35.2% and EBITDA margin to 9.7% from 11.0%; lower operating profit and a 33.2% QoQ fall in other income limited PAT growth to 8.0%.
Segments
The company reports a single Paints segment, so no segment-level driver is disclosed; the consolidated result is only modestly below standalone PAT because subsidiaries reported a ₹4.56 Cr quarterly net loss.
Key positives
- Consolidated revenue increased 18.6% YoY to ₹2317.38 Cr, the strongest growth in the recent series, despite a 2.4% sequential decline from ₹2373.59 Cr.
- Employee expense grew 3.7% YoY and other expenses fell 1.6% YoY, both materially below revenue growth of 18.6%.
- The balance sheet remained net-cash: ₹166.91 Cr net cash at 30 September 2026, with CWIP rising to ₹207.47 Cr from ₹169.91 Cr at March 2026.
Key concerns
- Gross margin compressed 516bps YoY to 30.1% as raw material cost rose to 69.7% of revenue from 57.9%, indicating substantial cost absorption because revenue grew 18.6% while material cost rose 42.8%.
- EBITDA margin fell 130bps YoY to 9.7% and 430bps QoQ from 14.0% in Q1FY27, reversing the recent margin recovery.
- H1 operating cash flow was negative ₹82.39 Cr versus positive ₹202.20 Cr a year ago, with inventory at ₹1922.51 Cr and receivables at ₹1909.98 Cr.
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