Atul's revenue grew 20.95%, but faster costs cut operating profit
The operating margin fell 4.10 percentage points, while a higher tax rate and significant other income shaped the 12.97% decline in net profit.
Filed 23 Oct 2026, 14:14 IST · Atul Ltd (ATUL)
Key takeaways
- Consolidated revenue grew +20.95% YoY, but expenses rose +26.94%, cutting operating margin by 4.10 percentage points to 13.14%.
- Net profit fell -12.97% YoY as the tax rate increased 4.82 percentage points, while other income contributed 23.26% of pre-tax profit.
- The stock fell -7.08% after the results, versus a 3.15% median absolute move across its last eight result reactions.
Price around the results
Revenue growth did not reach profit
Atul’s consolidated revenue grew +20.95% YoY, but operating profit declined -7.79% because expenses grew faster than sales. That operating-cost gap reduced operating margin to 13.14%, 4.10 percentage points below Q2FY26.
Costs and tax rate squeezed earnings quality
The tax rate rose 4.82 percentage points YoY, adding to the pressure on net profit, which fell -12.97%. Other income was 23.26% of pre-tax profit, so reported earnings also included a sizeable non-operating contribution. Atul’s 13.14% operating margin was 2.83 percentage points below the 15.97% median for the 15 Commodities peers that had reported.
Margin reverses its earlier recovery
Operating margin had improved from 15.70% in Q3FY26 to 16.81% in Q4FY26, but fell to 13.14% in the current quarter. The latest result therefore marks a sharp reversal rather than a continuation of the prior quarter’s improvement.
Market reaction was unusually negative
The stock fell -7.08% on October 23, with trading volume at 4.88 times the reference level. The move was larger than the 3.15% median absolute reaction across the last eight results, although the historical split was even at four rises and four falls.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | YoY |
|---|---|---|
| Revenue | ₹1,877 cr | +20.95% |
| Other income | ₹50 cr | +0.38% |
| Expenses | ₹1,630 cr | +26.94% |
| Operating profit | ₹247 cr | -7.79% |
| Operating margin (%) | 13.14% | — |
| Interest | ₹4 cr | -18.40% |
| Depreciation | ₹78 cr | -3.53% |
| Profit before tax | ₹214 cr | -7.31% |
| Tax | ₹56 cr | +13.82% |
| Net profit | ₹159 cr | -12.97% |
| EPS (₹) | ₹52.89 | -13.12% |
Operating margin of 13.14% compares with a Commodities sector median of 15.97% across 15 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -7.08% | -6.69% |
Volume on the results session was 4.88× its 20-day average.
What to watch
- Whether expense growth moderates from +26.94% YoY relative to revenue growth of +20.95%.
- Whether operating margin recovers from 13.14% toward the 16.81% recorded in Q4FY26.
- Whether other income remains a large contributor after accounting for 23.26% of pre-tax profit this quarter.