Nandan Denim Q2 FY27 Results (NSE: NDL)
Signal: Margin expansion
The read
The operating inflection is gross margin: it expanded 690bps YoY to 19.40% as raw-material intensity fell to 80.60%, lifting EBITDA margin to 4.00% despite revenue declining 22.52%; however, EBIT still fell 5.52%, operating cash flow was negative ₹3,717.72 lakh in H1FY27, and the 21.46% PAT growth was aided by a ₹588.52 lakh tax provision reversal.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹607.98 Cr | -22.52% | -2.32% |
| EBIT | ₹12.65 Cr | -5.52% | |
| Net profit | ₹11.47 Cr | +21.46% | |
| EPS | ₹0.08 | +14.29% | |
| EBIT margin | 4.00% |
P&L walk
Revenue declined 22.5% YoY and 2.3% QoQ, but gross margin expanded 690bps to 19.4% as raw-material cost fell to 80.6% of revenue; EBITDA margin improved to 4.0%, while EBIT declined 5.5% and PAT rose 21.5% mainly with a ₹588.52 lakh tax provision reversal.
Key positives
- Gross margin rose 690bps YoY to 19.40%, with raw-material cost declining to 80.60% of revenue from 87.50%.
- EBITDA margin improved 102bps YoY to 4.00% even as revenue declined 22.52% YoY to ₹60,798.18 lakh.
- Finance cost declined 26.34% YoY to ₹508.29 lakh.
Key concerns
- Revenue declined 22.52% YoY and 2.32% QoQ, with the filing providing no volume or realisation data to establish a demand recovery.
- PAT growth of 21.46% was assisted by a ₹588.52 lakh excess-provision reversal and a net tax benefit of ₹191.45 lakh, while EBIT declined 5.52%.
- Operating cash flow was negative ₹3,717.72 lakh in H1FY27 as trade receivables increased to ₹54,315.37 lakh from ₹37,664.84 lakh at March-end.
- Employee costs rose 4.26% YoY while revenue fell 22.52%, raising employee cost intensity to 4.07% from 3.02%.
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