Dwarikesh's Q2 loss narrows, but nil crushing keeps margin negative
Expenses fell faster than revenue QoQ, but nil crushing, fixed-cost under-absorption and high-cost inventory weighed on earnings.
Filed 29 Oct 2026, 14:44 IST · Dwarikesh Sugar Industries Ltd (DWARKESH)
Key takeaways
- Standalone Q2 net loss narrowed 49.01% sequentially as the operating loss reduced, but earnings remained negative.
- Operating margin improved 1.50 percentage points to -5.68% QoQ because expenses fell faster than revenue.
- Dwarikesh ranked second from the bottom among 21 reported FMCG peers, with operating margin 17.80 percentage points below the 12.12% median.
Price around the results
Nil crushing kept Q2 in the red
Dwarikesh reported standalone Q2FY27 results, with revenue down 28.35% QoQ and the net loss narrowing 49.01%. Management said the quarter was hurt by nil crushing, under-absorption of fixed overheads and lower margins on liquidation of high-cost inventory. The presentation also said sugar sales fell to 5.61 lakh quintals from 6.03 lakh quintals YoY, although average realisation rose to Rs 4,530 per quintal from Rs 3,963.
Lower costs helped, but did not restore profitability
Expenses declined 29.35% QoQ, faster than the 28.35% revenue decline, lifting operating margin by 1.50 percentage points to -5.68%. Interest costs fell 65.10%, which also helped narrow the pre-tax loss. Other income represented -31.51% of pre-tax profit because pre-tax earnings remained negative, while the tax rate was broadly unchanged, down 0.01 percentage points.
Margin remains near the bottom of the peer group
The sequential improvement came from Q1FY27's -7.18% operating margin, but there is only one prior quarter in the supplied trend, so a longer direction is not established. Dwarikesh's -5.68% margin was 17.80 percentage points below the 12.12% median for the 21 FMCG peers that had reported. That placed the company second from the bottom of the reported peer set.
Management links the next operating phase to crushing and cane supply
Management said crushing for SS 2026-27 is expected to begin on 5 November at the DN and DP units and on 11 November at DD. The company said it expects improved crushing volumes despite unseasonal rainfall, supported by crop protection and varietal development initiatives. It also said varietal migration is progressing and is intended to improve crushing performance, sugar recovery and operating efficiency. Management said it will focus on maximising sugar production and producing ethanol from C-heavy molasses under applicable regulations.
Q2FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹257 cr | ₹358 cr | -28.35% |
| Other income | ₹6 cr | ₹2 cr | +184.54% |
| Expenses | ₹271 cr | ₹384 cr | -29.35% |
| Operating profit | ₹-15 cr | ₹-26 cr | +43.31% |
| Operating margin (%) | -5.68% | -7.18% | — |
| Interest | ₹1 cr | ₹3 cr | -65.10% |
| Depreciation | ₹7 cr | ₹8 cr | -2.62% |
| Profit before tax | ₹-18 cr | ₹-34 cr | +49.04% |
| Tax | ₹-4 cr | ₹-9 cr | +49.07% |
| Net profit | ₹-13 cr | ₹-26 cr | +49.01% |
| EPS (₹) | ₹-0.71 | ₹-1.39 | +48.92% |
Operating margin of -5.68% compares with a Fast Moving Consumer Goods sector median of 12.12% across 21 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Q2 sugar sales declined to 5.61 lakh quintals, while average realization increased to Rs. 4,530 per quintal.
Guidance & outlook
- Global sugar production for 2026–27 is estimated at 180.7 MMT versus consumption of 179.6 MMT, indicating a modest surplus.
- Sugar prices are expected to remain firm in the near term.
- Crushing for SS 2026–27 is expected to start on 5 November at DN and DP and on 11 November at DD.
- The company expects improved crushing volumes despite unseasonal rainfall.
- The company will maximize sugar production and produce ethanol using C-heavy molasses under applicable regulations.
New initiatives
- The company is pursuing crop protection and varietal development initiatives to improve crushing volumes.
- The company is progressing with varietal migration to improve crushing performance, sugar recovery and operational efficiency.
- The company is focused on improving operational efficiencies, strengthening cost controls and optimizing performance.
Problems & risks
- Unseasonal and excessive rainfall caused waterlogging, crop lodging and concerns about stunted growth in Uttar Pradesh cane fields.
- The quarter was affected by nil crushing, under-absorption of fixed overheads and lower margins from high-cost inventory liquidation.
- Distillery sales volume and revenue declined 64% year-on-year because of feedstock unavailability.
What to watch
- Whether operating margin improves from -5.68% once crushing operations begin.
- Whether sugar sales recover from 5.61 lakh quintals while realisation holds above Rs 4,530 per quintal.
- Whether distillery performance improves after the reported 64% YoY decline in sales volume and revenue.