VTM Q2 FY27 Results (NSE: VTMLTD)
Signal: Margin expansion
The read
The earnings inflection is gross-margin-led: Q2FY27 margin recovered to 40.2% from 35.0% YoY and 32.1% QoQ on management-cited product mix, lifting EBITDA margin to 7.1% and PAT to 293.90 lakh; however, revenue was flat QoQ and finance cost rose 116.2% YoY, so the durability of the margin recovery remains the key trajectory question.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹98.17 Cr | +9.2% | -0.2% |
| Net profit | ₹2.94 Cr | +26.6% | |
| EPS | ₹0.29 | +26.6% | |
| EBIT margin | 7.1% |
P&L walk
Standalone revenue was 9816.53 lakh, up 9.2% YoY but down 0.2% QoQ; gross margin expanded 516bps to 40.2% on product mix, lifting EBITDA 38.9% to 693.59 lakh and PAT 26.6% to 293.90 lakh, despite finance cost rising 116.2% and depreciation rising 25.8%.
Key positives
- Gross margin expanded 516bps YoY to 40.2% as net material cost fell to 59.8% of sales from 65.0%, with management attributing the change to product mix.
- EBITDA rose 38.9% YoY to 693.59 lakh and EBITDA margin improved 151bps to 7.1%, despite revenue growth of 9.2%.
- PAT increased 26.6% YoY to 293.90 lakh and 52.1% QoQ, while EPS tracked PAT growth at 26.6%.
- Operating cash flow was 2030.87 lakh in H1FY27 versus 1837.15 lakh in H1FY26, exceeding H1 PAT of 487.14 lakh.
Key concerns
- Revenue declined 0.2% QoQ to 9816.53 lakh, so the margin recovery has not yet been accompanied by sequential topline acceleration.
- Finance cost increased 116.2% YoY to 86.05 lakh and depreciation increased 25.8% to 358.59 lakh, keeping PBT growth at 24.8%, below EBITDA growth of 38.9%.
- Other expenses rose 21.6% YoY to 2419.33 lakh, including additional selling and distribution expenditure toward customer retention and new markets, according to management.
- Product-mix-led gross-margin improvement is not yet proven as a durable trend because Q2FY27 margin of 40.2% remains below the FY26 margin of 37.1% only on a limited quarterly history and revenue was sequentially flat.
Research and educational content only. Not investment advice.