Suraj Q1 FY27 Results (NSE: SURAJLTD)
Signal: Margin expansion
The read
The quarter delivered a sharp margin recovery on the back of input cost tailwinds, with gross margin leaping 1871bps YoY. However, top-line contraction continues (22.5% YoY decline), and the margin improvement is not yet proven sustainable. The associate contribution, while positive, was lower than the exceptional year-ago level. The key question is whether the revenue decline has bottomed and whether margins can hold if input costs normalize.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹39.03 Cr | -22.5% | -10.2% |
| EBIT | ₹7.31 Cr | 17.6% | |
| Net profit | ₹3.59 Cr | 30.8% | |
| EPS | ₹1.95 | 30.9% | |
| EBIT margin | 18.7% |
P&L walk
Revenue declined 22.5% YoY to ₹3,902.77 Lakhs, but gross margin surged from 33.2% to 51.9% as raw material cost (net of inventory change) fell to 48.1% of revenue from 66.8% — a massive input cost tailwind. EBITDA margin expanded 639bps YoY to 18.7%. PAT grew 30.8% YoY to ₹358.96 Lakhs, aided by the margin expansion and a positive associate contribution of ₹34.74 Lakhs.
Key positives
- Gross margin expanded 1871bps YoY to 51.9% as raw material cost % of revenue dropped from 66.8% to 48.1%.
- EBITDA margin improved 639bps YoY to 18.7%, driving a 30.8% YoY increase in PAT despite a 22.5% revenue decline.
- Consolidated PAT of ₹358.96 Lakhs is the highest in the last 5 quarters.
- Associate contributed ₹34.74 Lakhs profit, adding to the bottom line.
Key concerns
- Revenue continues to decline — down 22.5% YoY and 10.2% QoQ, extending a multi-quarter trend.
- Margin expansion is primarily from input cost deflation; sustainability is uncertain if raw material costs rise.
- Employee cost % of revenue rose to 11.4% from 8.8% YoY due to fixed costs on a lower revenue base.
- Depreciation fell sharply YoY (down 51%), which could indicate lower asset base or a one-off adjustment; needs monitoring.
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