Solara Active Q1 FY27 Results (NSE: SOLARA)
Signal: Margin expansion
The read
Solara Active delivered a strong operating quarter: revenue of ₹381.60 Cr (+19.6% YoY), PAT of ₹16.31 Cr (+55% YoY) aided by gross margin expansion (raw material cost ratio fell ~438bps YoY) and lower finance costs. The tailwind from input cost deflation is the dominant story. Earnings quality is clean at the operating level, but EPS growth lags PAT due to equity dilution from a QIP (shares up ~8.4% YoY). Zero tax charge (current and deferred) has also inflated PAT — a note of caution. The trend is a clear recovery from the loss-making FY24-25 period, with margins firmly in expansion territory (4th consecutive quarter of positive EBITDA margin, though QoQ margin slipped slightly). Net debt reduction remains a key forward claim (target ~₹4,406 Mn by Mar 2027) — not yet assessable from this P&L-only filing.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹381.6 Cr | 19.6% | -1.5% |
| EBIT | ₹78.47 Cr | 16.3% | |
| Net profit | ₹16.31 Cr | 55.0% | |
| EPS | ₹3.52 | 43.1% | |
| EBIT margin | 20.56% |
P&L walk
Revenue growth of 19.6% YoY to ₹381.60 Cr, driven by volume/mix. Gross margin expanded ~438bps YoY as raw material cost % of revenue fell to 47.38% from 51.76%, an input-cost tailwind. EBITDA margin (OPM calc: rev minus raw mat, change in inventories, employee, other expenses) improved to ~20.56% (+123bps YoY) as raw material and other expense ratios contracted. Operating leverage was not present because employee costs grew in line with revenue (4.5% vs revenue 19.6%) and depreciation rose 13.3% — fixed costs did not lag sufficiently to pass Gate 3. Finance costs fell 9.5% YoY, aiding PBT. PAT at ₹16.31 Cr (+55% YoY) benefited from zero tax. EPS growth of 43.1% lagged PAT growth due to equity dilution (shares outstanding rose from 44.34 Cr to 48.06 Cr, ~8.4% increase) — a QIP effect.
Key positives
- Revenue growth of 19.6% YoY to ₹381.60 Cr, driven by volume/mix.
- Gross margin expanded via raw material cost tailwind: raw material % of revenue fell from 51.76% to 47.38% (-438bps YoY).
- PAT up 55% YoY to ₹16.31 Cr, aided by zero tax and lower finance costs (-9.5% YoY).
- EBITDA margin (derived) at 20.56%, +123bps YoY, marking the 4th consecutive quarter of positive margins after losses.
Key concerns
- EPS growth of 43.1% lags PAT growth of 55% due to equity dilution from QIP (shares up 8.4% YoY).
- Zero tax expense (both current and deferred) inflates reported PAT; the benefit may not recur.
- Sequential revenue declined 1.5% QoQ, and EBITDA margin slipped 58bps QoQ from Q4FY26 levels.
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