Kronox Lab Q2 FY27 Results (NSE: KRONOX)
Signal: Margin pressure
The read
The quarter marks a sequential margin recovery but not a growth inflection: revenue was up only 5.1% YoY and down 5.5% QoQ, while gross margin recovered to 54.5% QoQ but remained 98bps below the year-ago level, leaving PAT down 3.5% YoY. H1 revenue still grew 10.8% and PAT 5.2%, but the trajectory is constrained by material intensity and higher other expenses.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹26.83 Cr | 5.1% | -5.5% |
| Net profit | ₹6.44 Cr | -3.5% | |
| EPS | ₹1.73 | -3.9% | |
| EBIT margin | 34.7% |
P&L walk
Standalone revenue was 2683.42 lakh, up 5.1% YoY but down 5.5% QoQ; gross margin compressed 98bps YoY to 54.5% as material intensity rose, while the 376bps sequential recovery was not enough to prevent PAT falling 3.5% YoY to 644.03 lakh.
Key positives
- H1FY27 revenue rose 10.8% YoY to 5522.06 lakh and H1 PAT rose 5.2% to 1374.33 lakh despite the weaker Q2 exit rate.
- Gross margin recovered 376bps QoQ to 54.5%, as material and inventory intensity fell to 45.5% of revenue from 49.3% in Q1FY27.
- Operating cash flow rose 52.8% YoY to 1604.13 lakh in H1FY27, while cash and bank balances reached 7952.05 lakh and borrowings fell to nil.
Key concerns
- Q2 revenue declined 5.5% sequentially and PAT declined 11.8% sequentially, indicating the H1 growth rate is losing momentum into the second quarter.
- Gross margin remains 98bps below the year-ago level because material and inventory intensity rose to 45.5% of revenue from 44.5%.
- Other expenses rose 16.4% YoY against 5.1% revenue growth, increasing to 16.0% of revenue from 14.4%.
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