Paras Defence Q1 FY27 Results (NSE: PARAS)
Signal: Margin expansion
The read
The quarter marks a YoY earnings recovery after Q1FY26's 23% margin, with consolidated EBITDA margin expanding to 26.5% and PAT rising 42.7% to 2,122 lakh; however, revenue declined 25.3% QoQ and gross margin compressed 1,350bps YoY as raw-material intensity rose to 51.5%, so the durability of margin recovery depends on mix and cost pass-through.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹127.91 Cr | +37.3% | -25.3% |
| EBIT | ₹29.36 Cr | N/A | |
| Net profit | ₹21.22 Cr | +42.7% | |
| EPS | ₹2.63 | +42.2% | |
| EBIT margin | 26.5% |
P&L walk
Revenue rose to 12,791 lakh, up 37.3% YoY but down 25.3% QoQ; EBITDA margin recovered to 26.5%, up 560bps YoY, while PAT increased 42.7% YoY to 2,122 lakh despite raw-material intensity rising to 51.5% of revenue.
Segments
Optics and Optronic Systems was the growth and profit anchor, with revenue up 62.1% YoY to 6,890 lakh and result up 19.4% to 2,642 lakh, while Defence Engineering revenue grew only 16.4% YoY and fell 47.1% QoQ to 5,901 lakh.
Key positives
- Consolidated revenue rose 37.3% YoY to 12,791 lakh, led by Optics and Optronic Systems revenue growth of 62.1% to 6,890 lakh.
- EBITDA margin expanded 560bps YoY to 26.5%, reversing the 600bps contraction recorded in Q1FY26.
- Employee costs grew 30.8% YoY versus 37.3% revenue growth, declining to 11.8% of revenue from 12.4%.
- EPS rose 42.2% YoY to ₹2.63, closely tracking 42.7% PAT growth.
Key concerns
- Gross margin compressed 1,350bps YoY as raw-material cost increased to 51.5% of revenue from 38.0%, indicating cost absorption or an adverse mix with no driver disclosed.
- Consolidated revenue declined 25.3% QoQ to 12,791 lakh, and Defence Engineering revenue declined 47.1% QoQ to 5,901 lakh.
- Defence Engineering assets increased to 44,468 lakh from 31,377 lakh YoY while its quarterly revenue growth remained 16.4% YoY, requiring evidence of better asset utilisation.
Research and educational content only. Not investment advice.