Vinyl Chemicals Q1 FY27 Results (NSE: VINYLINDIA)
Signal: Margin pressure
The read
Top-line growth of 20% YoY was overshadowed by a massive gross margin collapse from ~28.6% to 14.2% as input cost (purchases) surged to 166% of revenue, compressing trading spreads; however, EBIT margin expanded 166bps to 8.9% due to inventory drawdown reversal — the headline PAT drop of -45% is misleading because prior Q1 had a deferred tax credit; underlying operating profit actually grew 48%, but this is entirely volume-driven with no pricing power or margin improvement.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹99.64 Cr | 20.32% | -44.60% |
| EBIT | ₹8.89 Cr | 47.67% | |
| Net profit | ₹6.62 Cr | -44.88% | |
| EPS | ₹3.61 | 49.17% | |
| EBIT margin | 8.92% |
P&L walk
Revenue rose 20.3% YoY to ₹9,964 lakh, driven by higher volume/turnover, but gross margin collapsed from 28.6% to 14.2% (-1440bps) as purchase cost of traded goods jumped to 166.4% of revenue (+2440bps), partially offset by a large inventory drawdown reversal ( -76.6% of revenue vs -29.4%), pushing EBIT margin to 8.92% (+166bps YoY). Net profit fell 44.9% to ₹662 lakh as the margin squeeze was amplified by deferred tax reversal (-103 vs +84), leaving PAT margin at 6.64% (-760bps). EPS at ₹3.61 (+49.2%) tracks PAT growth exactly — no dilution.
Segments
Single-segment trading business; no subsidiary drag or push.
Key positives
- Revenue grew 20.3% YoY to ₹9,964 lakh, driven by higher trading volumes.
- EBIT grew 47.7% YoY to ₹889 lakh, with EBIT margin expanding 166bps to 8.92%.
- EPS at ₹3.61 (+49.2% YoY) — clean growth with no equity dilution.
- Company has zero debt (D/E 0) with dividend yield of 2.81%.
- Limited review report is clean — no audit qualifications.
Key concerns
- Gross margin collapsed from 28.6% to 14.2% (-1440bps) as purchase cost rose to 166.4% of revenue — input cost inflation far outpaced revenue growth.
- Net profit fell 44.9% to ₹662 lakh, hit by higher tax provision (₹330 lakh vs ₹73 lakh) and deferred tax reversal (-103 vs +84).
- Employee costs grew 47.6% YoY, far ahead of revenue growth, eroding operating leverage.
- Quarter-on-quarter revenue declined 44.6% from Q4 FY26 (₹17,984 lakh), reflecting quarter-end adjustments typical of a trading business.
- PAT margin dropped to 6.64% from 14.78% a year ago (-814bps).
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