NELCO Q1 FY27 Results (NSE: NELCO)
Signal: Growth decelerated
The read
Consolidated revenue growth remained tepid (7% YoY) and EBITDA margin slipped YoY despite QoQ improvement; PAT was saved by a one-off exceptional reversal. Standalone performance was stronger (17% revenue growth, margin expansion), suggesting the subsidiary/associate may be dragging group profitability. The Labour Code provision reversal is non-recurring – underlying earnings are softer.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹80.03 Cr | 7.0% | 1.1% |
| Net profit | ₹2.34 Cr | 30.0% | |
| EPS | ₹1.02 | ||
| EBIT margin | 10.57% |
P&L walk
Revenue grew modestly 7% YoY, driven by volume/mix; EBITDA margin contracted 54bps YoY due to higher employee and other expenses, but expanded 115bps QoQ reflecting cost control. PAT was boosted by a ₹106 lakh exceptional reversal (Labour Code provision reversal), without which PAT would have been ₹128 lakh (-29% YoY).
Key positives
- Standalone revenue grew 17% YoY, outpacing consolidated, indicating healthy parent-level demand.
- Standalone EBITDA margin expanded 340bps YoY to 13.88% on operating leverage.
- Consolidated PAT grew 30% YoY (though aided by exceptional reversal).
- Exceptional reversal of ₹106 lakh (consolidated) reflects completion of Labour Code restructuring, removing uncertainty.
Key concerns
- Consolidated EBITDA margin contracted 54bps YoY to 10.57%, as employee and other expenses grew faster than revenue.
- Underlying consolidated PAT (excluding exceptional reversal) would have been ~₹128 lakh, down 29% YoY.
- Consolidated revenue growth of 7% YoY is modest for a small-cap hardware firm.
- High P/E (3306x) and low ROE (0.46%) imply extreme valuation risk relative to current earnings.
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