Sarla Performanc Q2 FY27 Results (NSE: SARLAPOLY)
Signal: Margin pressure
The read
The quarter shows an operating recovery in revenue but not yet a clean earnings recovery: consolidated revenue grew 11.9% YoY, while derived operating margin fell about 270bps and PAT nearly doubled mainly alongside other income of ₹2,785.97 lakh. The sharp standalone-to-consolidated PAT gap and auditor emphasis on Sarlaflex Inc., unresolved JV consolidation and regulatory ratification make earnings quality and subsidiary transparency the central trajectory issue.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹119.89 Cr | +11.9% | +5.8% |
| Net profit | ₹37.28 Cr | +95.8% | |
| EPS | ₹4.72 | +107.9% | |
| EBIT margin | 21.0% |
P&L walk
Consolidated revenue increased to ₹11,988.50 lakh, +11.9% YoY and +5.8% QoQ, while derived operating margin declined to 21.0% from about 23.7% YoY; PAT rose 95.8% to ₹3,728.24 lakh, helped materially by ₹2,785.97 lakh of other income.
Segments
Yarn drove the group with ₹11,739.52 lakh of revenue and ₹2,121.71 lakh of segment result, while Wind Power contributed ₹288.38 lakh of revenue and ₹133.13 lakh of result; the consolidated PAT of ₹3,728.24 lakh was far above standalone PAT of ₹1,199.94 lakh because of subsidiary contributions and other group items.
Key positives
- Consolidated revenue increased 11.9% YoY to ₹11,988.50 lakh, with Yarn revenue up to ₹11,739.52 lakh and Wind Power revenue up 21.9% YoY to ₹288.38 lakh.
- Consolidated PAT rose 95.8% YoY to ₹3,728.24 lakh and EPS increased 107.9% to ₹4.72, with EPS tracking PAT rather than lagging it.
- Yarn segment result was ₹2,121.71 lakh and Wind Power remained profitable at ₹133.13 lakh, so both disclosed operating segments contributed positively.
Key concerns
- Derived consolidated operating margin declined to about 21.0% from about 23.7% YoY as raw-material cost remained ₹5,259.28 lakh and the company cited higher freight and raw-material costs.
- Other income rose 168.6% YoY to ₹2,785.97 lakh and materially supported PAT of ₹3,728.24 lakh, making the bottom-line increase less representative of recurring operations.
- Finance cost increased 43.6% YoY to ₹301.91 lakh, considerably faster than revenue growth of 11.9%.
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