SML Mahindra Q2 FY27 Results (NSE: SMLMAH)
Signal: Margin pressure
The read
The key inflection is worsening profitability rather than demand: Q2 revenue grew 20.7% YoY to ₹669.79 crore, but EBITDA margin fell 329bps to 4.26% after a 208bps decline in Q1FY26, making this the second consecutive quarter of YoY margin compression; the ₹323.78 crore H1 operating cash flow and ₹248.99 crore net-debt reduction provide balance-sheet support, but do not yet offset the earnings deterioration.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹669.79 Cr | +20.7% | -30.1% |
| Net profit | ₹11.7 Cr | -44.4% | |
| EPS | ₹8.09 | -44.4% | |
| EBIT margin | 4.26% |
P&L walk
Q2 revenue increased 20.7% YoY to ₹669.79 crore, but gross margin compressed 297bps to 21.37% and EBITDA margin fell 329bps to 4.26%, driving PAT down 44.4% to ₹11.70 crore; the sequential deterioration was sharper, with revenue down 30.1% and EBITDA margin down 619bps.
Key positives
- Revenue increased 20.7% YoY to ₹669.79 crore despite a 30.1% QoQ decline, maintaining positive year-on-year growth.
- H1 operating cash flow rose 150.8% YoY to ₹323.78 crore, supported by a ₹173.94 crore reduction in trade receivables and a ₹64.02 crore reduction in inventories.
- Net debt fell to ₹10.46 crore from ₹259.45 crore at 31 March 2026 as borrowings were repaid.
Key concerns
- Gross margin compressed 297bps YoY to 21.37%, and raw materials plus purchases fell only to 82.02% of revenue from 86.59% despite revenue growth of 20.7%; the filing does not disclose the underlying pricing or mix driver.
- EBITDA margin fell 329bps YoY to 4.26% and 619bps QoQ, while PAT declined 44.4% YoY to ₹11.70 crore.
- Q2 revenue declined 30.1% QoQ from ₹957.54 crore, and the filing provides no volume or realisation disclosure to establish whether the YoY growth is volume-led.
- The company has approved a ₹525 crore acquisition of Mahindra & Mahindra's Truck and Bus Division, subject to working-capital adjustments and customary closing conditions, creating a material capital-allocation and execution milestone before the expected 31 January 2027 closing.
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