Kingfa Science Q2 FY27 Results (NSE: KINGFA)
Signal: Margin pressure
The read
The key inflection is a sharp margin reversal: after EBITDA margin expanded to 16.1% in Q1FY27, Q2FY27 margin fell to 8.1% as gross margin compressed 697bps YoY and raw-material-related costs rose to 82.9% of revenue; revenue still accelerated 55.3%, but PAT growth of 14.3% relied partly on other income of ₹1,410.59 lakh and operating cash flow turned negative at ₹5.70 lakh.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹723.08 Cr | +55.3% | +5.0% |
| EBIT | ₹50 Cr | -6.4% | |
| Net profit | ₹47.03 Cr | +14.3% | |
| EPS | ₹34.71 | +3.1% | |
| EBIT margin | 8.1% |
P&L walk
Revenue accelerated to ₹72,307.97 lakh, up 55.3% YoY and 5.0% QoQ, but gross margin fell to 17.1% from 24.0% a year ago as material costs rose to 81.5% of revenue; EBITDA margin consequently fell to 8.1%, while PAT still rose 14.3% partly supported by ₹1,410.59 lakh of other income.
Key positives
- Revenue from operations rose 55.3% YoY to ₹72,307.97 lakh, accelerating from 49.1% YoY in Q1FY27.
- Employee benefits and other expenses grew 34.6% YoY, 20.7 percentage points slower than revenue growth, cushioning the gross-margin shock.
- PPE increased to ₹34,924.52 lakh from ₹30,021.62 lakh while CWIP declined to ₹1,019.67 lakh, and depreciation rose 18.4% YoY to ₹850.12 lakh, a clean capex-to-depreciation progression.
Key concerns
- Gross margin fell 697bps YoY to 17.1% as material-related costs reached 82.9% of revenue versus 76.0% a year ago; the filing does not disclose the cause or evidence of pass-through.
- Operating margin fell to 8.1% from 13.0% a year ago and 16.1% in Q1FY27 despite 55.3% revenue growth, reversing the recent margin expansion trend.
- Half-year operating cash flow was negative at ₹5.70 lakh versus ₹10,892.20 lakh inflow a year ago, with receivables and inventories absorbing ₹15,468.27 lakh and ₹11,409.67 lakh respectively.
- EPS rose only 3.1% to ₹34.71 while PAT rose 14.3% to ₹4,703.06 lakh, requiring clarification of the earnings-per-share divergence.
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