Prostarm Info Q1 FY27 Results (NSE: PROSTARM)
Signal: Margin expansion
The read
The key inflection is a recovery from Q1FY26's weak base: consolidated revenue rose 38.5% YoY to ₹7604.82 lakh and EBITDA margin expanded 323bps to 11.85%, with employee costs growing only 14.4% versus revenue growth of 38.5%; however, gross margin compressed 268bps to 24.79%, finance costs rose 31.6%, PAT fell 42.4% QoQ, and the group absorbed ₹43.15 lakh of subsidiary net losses, so the improvement is not yet a clean demand-and-margin trend.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹76.05 Cr | +38.5% | -27.2% |
| Net profit | ₹4.58 Cr | +150.5% | |
| EPS | ₹0.78 | +100.0% | |
| EBIT margin | 11.85% |
P&L walk
Consolidated revenue was ₹7604.82 lakh, +38.5% YoY but -27.2% QoQ; EBITDA margin improved to 11.85% from 8.62% a year earlier as employee-cost intensity fell, although gross margin compressed by 268bps and subsidiary losses reduced group PAT to ₹457.93 lakh versus standalone PAT of ₹501.26 lakh.
Key positives
- Consolidated revenue reached ₹7604.82 lakh, +38.5% YoY, recovering materially from ₹5491.39 lakh in Q1FY26.
- EBITDA grew +90.3% YoY to ₹901.91 lakh versus revenue growth of +38.5%, a +51.8 percentage-point growth gap; employee costs grew +14.4% and depreciation +22.3%, both slower than revenue, while EBITDA margin expanded 323bps to 11.85%.
- Standalone EBITDA margin expanded 418bps YoY to 12.51%, supported by employee-cost intensity falling to 9.15% from 10.83%.
- The company has substantially completed infrastructure and operational facilities, with only the requisite regulatory licence/approval pending according to management.
Key concerns
- Gross margin compressed 268bps YoY to 24.79% as raw-material and inventory cost rose to 75.21% of revenue from 72.52%; revenue grew but the company absorbed cost pressure, with no pricing or mix explanation disclosed.
- Consolidated PAT of ₹457.93 lakh was ₹43.33 lakh below standalone PAT of ₹501.26 lakh because subsidiaries reported losses; two subsidiaries together reported a net loss of ₹43.15 lakh before consolidation adjustments.
- Finance costs increased 31.6% YoY to ₹208.07 lakh and 54.3% QoQ, creating a growing drag below EBITDA.
- The proposed issue of 29,43,717 fully convertible warrants could increase the equity base; basic EPS growth of 100.0% already lagged PAT growth of 150.5% YoY.
- Commissioning of the new facilities has been delayed pending regulatory approval and is now expected only by September 30, 2026.
Research and educational content only. Not investment advice.