ZF Commercial Q1 FY27 Results (NSE: ZFCVINDIA)
Signal: Margin pressure
The read
Revenue growth resumed at +9.3% YoY after a tepid Q4FY26 (+5.5%), but margins took a sharp hit: EBITDA margin contracted ~400bps to 16.3% as raw material cost inflation (+14.7% YoY) and a 46.5% plunge in other income crushed profitability. This is a reversal from the prior two quarters of margin expansion (Q2-Q4FY26). PAT fell 14.6% YoY, raising concerns about pricing power and input cost pass-through, even as the topline improves.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹1,066.18 Cr | 9.3% | -7.7% |
| EBIT | ₹138.85 Cr | -14.7% | |
| Net profit | ₹104.48 Cr | -14.6% | |
| EPS | ₹9.18 | -14.6% | |
| EBIT margin | 13.0% |
P&L walk
Revenue growth of 9.3% YoY driven by higher sales of automotive components, but gross margin compressed 150bps to 40.6% as raw material costs outpaced revenue (+14.7% vs +9.3%). EBITDA margin fell sharply by ~400bps to 16.3%, also weighed by a 46.5% drop in other income. PAT declined 14.6% YoY, despite lower finance costs and stable depreciation.
Key positives
- Revenue growth accelerated to +9.3% YoY from +5.5% in Q4FY26 and near-flat in earlier quarters, indicating demand recovery.
- Segment assets grew 13.4% YoY to ₹4,506.52 Cr, reflecting continued investment in capacity.
- Net debt remains negligible (D/E 0.01), providing financial flexibility.
Key concerns
- EBITDA margin contracted ~400bps YoY to 16.3%, reversing two quarters of expansion, driven by raw material cost increase (+14.7% vs revenue +9.3%).
- Other income halved to ₹35.63 Cr, contributing significantly to PAT decline.
- Gross margin fell 150bps YoY to 40.6%, signaling weaker pricing power or unfavorable mix.
- PAT declined 14.6% YoY despite higher revenue, the first YoY PAT drop in several quarters.
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