Nelcast Q2 FY27 Results (NSE: NELCAST)
Signal: Margin pressure
The read
The quarter shows a sharp gross-margin inflection after the Q1FY27 compression: revenue rose to 40595.39 lakh, +94.5% YoY, and gross margin expanded 2055bps to 55.0% as raw-material intensity fell to 43.8%, driving PAT to 1620.30 lakh, +240.7%; however, EBITDA margin still declined 127bps YoY to 8.96%, so the durability of the margin recovery remains unproven.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹405.95 Cr | +94.5% | +19.0% |
| EBIT | ₹29.42 Cr | +99.0% | |
| Net profit | ₹16.2 Cr | +240.7% | |
| EPS | ₹1.86 | +238.2% | |
| EBIT margin | 8.96% |
P&L walk
Consolidated revenue increased to 40595.39 lakh, +94.5% YoY and +19.0% QoQ, while gross margin expanded to 55.0% from 34.5% YoY as raw-material intensity fell to 43.8% from 62.5%; EBITDA margin nevertheless declined to 8.96% from 10.23% because the filing does not disclose the precise operating-cost driver.
Segments
The company reports a single segment, Iron Castings; consolidated and standalone results are identical because NC Energy Limited has not commenced commercial operations and contributed nil revenue and nil profit.
Key positives
- Gross margin expanded 2055bps YoY to 55.0% as raw-material cost fell to 43.8% of revenue from 62.5%.
- PAT rose 240.7% YoY to 1620.30 lakh, helped by PBT growth to 2197.83 lakh from 635.88 lakh.
- Operating cash flow increased 86.6% YoY to 3865.88 lakh in H1FY27, exceeding H1 PAT of 2133.96 lakh.
- Finance costs declined 11.6% YoY to 744.56 lakh, supporting EBIT growth of 99.0%.
Key concerns
- EBITDA margin declined 127bps YoY to 8.96% despite the 2055bps gross-margin expansion, indicating that the gross-margin benefit did not fully translate into operating margin.
- Revenue growth of 94.5% YoY is not supported by a disclosed volume or realisation split, limiting assessment of underlying demand quality.
- The filing does not disclose whether the 2055bps gross-margin expansion reflects input deflation, pricing power or mix, so persistence is uncertain.
- Gross PPE declined to 49441.95 lakh despite depreciation of 696.89 lakh and only 576.39 lakh of CWIP at period-end.
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