Margin held up, but profit fell as other income dropped
Consolidated revenue fell -8.94% QoQ, while a higher tax rate and a -76.00% fall in other income pulled net profit down -26.85%.
Filed 26 Oct 2026, 12:33 IST · DRC Systems India Ltd (DRCSYSTEMS)
Key takeaways
- Sequential revenue fell 8.94%, but expenses fell 9.36%, lifting operating margin by 0.35 percentage points to 27.72%.
- Net profit declined 26.85% sequentially to Rs 4.06 cr as other income fell 76.00% and the tax rate rose 2.17 percentage points.
- Operating margin was 8.07 percentage points above the Information Technology peer median across 23 companies that had reported.
Price around the results
Revenue fell, while profit declined faster
DRC Systems' consolidated Q2FY27 revenue fell 8.94% sequentially to Rs 21.29 cr, and operating profit declined 7.81% to Rs 5.90 cr. Net profit fell 26.85% to Rs 4.06 cr because the decline in other income and the higher tax rate more than offset the operating-margin improvement.
Expense control lifted the operating margin
Expenses declined 9.36%, faster than revenue, which widened operating margin by 0.35 percentage points to 27.72%. Interest was unchanged sequentially, while depreciation rose 0.59%, so the main below-operating-profit pressure came from other income, which fell from Rs 1.25 cr to Rs 0.30 cr. Other income accounted for 6.86% of pre-tax profit in the quarter, while the tax rate increased from 4.77% to 6.94%.
Margin stayed ahead of the reported IT peer set
The 27.72% operating margin was 8.07 percentage points above the 19.65% median for 23 Information Technology peers that had reported the quarter. The available sequential trend shows a modest margin improvement from Q1FY27's 27.37%, even as revenue and net profit weakened.
Shares ended above the opening level
The stock gained 0.80% on October 26 after opening 2.67% higher, with volume at 1.28 times its average. The session therefore gave back part of the initial reaction while still closing higher.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹21 cr | ₹23 cr | -8.94% |
| Other income | ₹0 cr | ₹1 cr | -76.00% |
| Expenses | ₹15 cr | ₹17 cr | -9.36% |
| Operating profit | ₹6 cr | ₹6 cr | -7.81% |
| Operating margin (%) | 27.72% | 27.37% | — |
| Interest | ₹0 cr | ₹0 cr | +0.00% |
| Depreciation | ₹2 cr | ₹2 cr | +0.59% |
| Profit before tax | ₹4 cr | ₹6 cr | -25.04% |
| Tax | ₹0 cr | ₹0 cr | +7.14% |
| Net profit | ₹4 cr | ₹6 cr | -26.85% |
| EPS (₹) | ₹0.28 | ₹0.39 | -28.21% |
Operating margin of 27.72% compares with a Information Technology sector median of 19.65% across 23 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.80% | +0.12% |
Volume on the results session was 1.28× its 20-day average.
What to watch
- Whether revenue moves back above the Q1FY27 level of Rs 23.38 cr.
- Whether operating margin holds above 27.72%.
- Whether other income remains near Rs 0.30 cr without becoming a larger profit driver.