Revenue growth lagged cost growth, squeezing CESC's YoY margin
A sequential margin rebound was offset by a 4.02 percentage-point YoY tax-rate rise and other income equal to 30.38% of pre-tax profit.
Filed 05 Nov 2026, 11:29 IST · CESC Ltd (CESC)
Key takeaways
- Revenue rose +6.46% YoY, but expenses grew +8.61%, cutting operating margin by 1.61 percentage points.
- Net profit fell -1.57% YoY as the tax rate rose 4.02 percentage points, despite pre-tax profit increasing +3.72%.
- Operating margin recovered 2.21 percentage points QoQ to 18.53%, but remained 10.37 percentage points below the Utilities peer median.
Price around the results
Consolidated growth did not convert into higher operating profit
CESC's consolidated revenue increased +6.46% YoY, but expenses grew faster at +8.61%, reducing operating profit by -2.07%. The resulting 1.61 percentage-point margin decline explains why net profit fell -1.57% even as pre-tax profit rose +3.72%. Other income contributed 30.38% of pre-tax profit, making reported earnings less dependent on operations.
Sequential margin recovery followed three quarters of decline
Revenue rose +2.22% QoQ while expenses declined -0.48%, lifting operating margin by 2.21 percentage points and operating profit by +16.09%. The improvement interrupted a three-quarter slide in margin from 20.14% in Q2FY26 to 16.32% in Q1FY27. Higher interest expense, up +7.37% QoQ, and a 2.00 percentage-point increase in the tax rate limited the flow-through to net profit, which rose +4.53%.
CESC remains below the Utilities peer margin benchmark
CESC's 18.53% operating margin was 10.37 percentage points below the 28.9% median for the 25 Utilities peers that had reported the same quarter. It ranked 10th from the bottom on this measure.
Past result reactions have been evenly split
The current post-results market move is not yet established. Across the last eight result reactions, the stock rose four times and fell four times, with a median absolute move of 4.02%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹5,607 cr | ₹5,485 cr | +2.22% | +6.46% |
| Other income | ₹178 cr | ₹254 cr | -29.92% | +17.11% |
| Expenses | ₹4,568 cr | ₹4,590 cr | -0.48% | +8.61% |
| Operating profit | ₹1,039 cr | ₹895 cr | +16.09% | -2.07% |
| Operating margin (%) | 18.53% | 16.32% | — | — |
| Interest | ₹335 cr | ₹312 cr | +7.37% | -0.59% |
| Depreciation | ₹296 cr | ₹291 cr | +1.72% | -4.82% |
| Profit before tax | ₹586 cr | ₹546 cr | +7.33% | +3.72% |
| Tax | ₹148 cr | ₹127 cr | +16.54% | +23.33% |
| Net profit | ₹438 cr | ₹419 cr | +4.53% | -1.57% |
| EPS (₹) | ₹3.20 | ₹3.03 | +5.61% | -0.31% |
Operating margin of 18.53% compares with a Utilities sector median of 28.90% across 25 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -2.96% | -4.97% |
Volume on the results session was 1.73× its 20-day average.
What to watch
- Whether operating margin holds above 18.53% after the sequential rebound.
- Whether expenses continue to grow more slowly than revenue after +8.61% YoY expense growth versus +6.46% revenue growth.
- Whether other income's contribution to pre-tax profit falls below 30.38%.