Scan Steels Q2 FY27 Results (NSE: SCANSTL)
Signal: Margin expansion
The read
Q2FY27 marked a sharp operating recovery with revenue up 28.2% YoY and EBITDA margin up 382bps to 8.1%, including operating leverage as employee cost grew 10.5% and depreciation declined 0.3%; however, PAT quality is weak because 1194.80 lakh of other income drove most of the 1491.80 lakh consolidated profit, while margin moderated 99bps sequentially from Q1FY27.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹170.44 Cr | +28.2% | -33.9% |
| EBIT | ₹9.87 Cr | +465.7% | |
| Net profit | ₹14.92 Cr | +7,624.9% | |
| EPS | ₹2.46 | +8,100.0% | |
| EBIT margin | 8.1% |
P&L walk
Revenue increased to 17043.87 lakh, +28.2% YoY, and EBITDA margin expanded to 8.1% from 4.3%, supported by operating-cost control, but consolidated PAT of 1491.80 lakh was dominated by 1194.80 lakh of other income and 39.21 lakh of associate profit.
Segments
The company reports only one segment, Steel Manufacturing; the material consolidated-versus-standalone difference is the 39.21 lakh share of associate profit, lifting consolidated PAT from 1452.59 lakh to 1491.80 lakh.
Key positives
- Revenue increased to 17043.87 lakh, +28.2% YoY, reversing the 5.0% YoY decline reported in Q2FY26.
- EBITDA margin expanded to 8.1% from 4.3% YoY, with EBITDA growth of 142.9% outpacing revenue growth of 28.2% by 114.7 percentage points.
- Employee cost grew 10.5% YoY and depreciation declined 0.3% while revenue grew 28.2%, supporting operating-cost absorption and the 382bps margin expansion.
- Operating cash flow turned positive at 500.37 lakh in H1FY27 versus negative 2066.49 lakh in H1FY26.
Key concerns
- Gross margin compressed 182bps YoY to 34.9%, despite raw material cost falling to 66.2% of revenue from 81.9%; the filing does not explain the margin movement.
- Quarterly revenue declined 33.9% sequentially from 25778.84 lakh to 17043.87 lakh and EBITDA margin fell 99bps from 9.1%.
- Borrowings increased by 2782.18 lakh from March to 9951.50 lakh, taking net debt to 7562.79 lakh despite cash rising to 2388.71 lakh.
- Consolidated PAT of 1491.80 lakh was heavily supported by 1194.80 lakh of other income, versus 6.29 lakh a year earlier, making the profit growth less representative of recurring steel operations.
Research and educational content only. Not investment advice.