EIH profit jumps, but operating margin falls for a second quarter
Revenue grew 14.54% year on year, yet faster expense growth cut operating margin by 2.51 percentage points; other income contributed 26.8% of pre-tax profit.
Filed 06 Aug 2026, 18:55 IST · after market close · EIH Ltd (EIHOTEL)
Key takeaways
- Consolidated net profit rose 226.22% year on year, helped by the reversal of last year's negative other income and a 2.99 percentage-point lower tax rate.
- Revenue grew 14.54% year on year, but expenses grew 18.53%, reducing operating margin by 2.51 percentage points to 25.35%.
- Operating margin fell 11.95 percentage points sequentially to 25.35%, its second consecutive quarterly decline after the Q3FY26 peak.
Price around the results
Profit growth was amplified by the comparison base
EIH Ltd reported consolidated net profit growth of 226.22% year on year, while revenue increased 14.54%. The sharp profit increase partly reflects the comparison with Q1FY26, when other income was negative; other income contributed 26.8% of current-quarter profit before tax. The 2.99 percentage-point decline in the tax rate also supported the conversion of pre-tax profit into net profit.
Costs outpaced revenue and compressed the margin
Expenses grew 18.53% year on year against 14.54% revenue growth, so operating margin narrowed by 2.51 percentage points. Sequentially, revenue fell 26.61% while expenses declined only 12.62%, leading to an 11.95 percentage-point margin contraction. Interest expense fell 8.66% sequentially, but that was not enough to offset the operating cost pressure.
Margin remains above the reported peer median
EIH's 25.35% operating margin was 12.68 percentage points above the 12.67% median for the 105 Consumer Discretionary peers that had reported the same quarter. The quarterly trend is less favourable: margin fell from 43.1% in Q3FY26 to 37.3% in Q4FY26 and then to 25.35% in Q1FY27. This is the second consecutive quarterly decline, although the current margin remains above the 25.71% recorded in Q2FY26.
The stock reaction is not yet available, but past reactions were consistently negative
The consolidated results were filed after market close, so there was no reported market reaction at the time of this note. After the previous eight results, the stock fell on all eight occasions, with a median absolute move of 2.39%. The last six recorded moves ranged from -1.69% to -3.35%.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹657 cr | ₹895 cr | -26.61% | +14.54% |
| Other income | ₹45 cr | ₹78 cr | -42.17% | — |
| Expenses | ₹490 cr | ₹561 cr | -12.62% | +18.53% |
| Operating profit | ₹167 cr | ₹334 cr | -50.13% | +4.20% |
| Operating margin (%) | 25.35% | 37.30% | — | — |
| Interest | ₹6 cr | ₹6 cr | -8.66% | -3.95% |
| Depreciation | ₹37 cr | ₹38 cr | -2.48% | +10.91% |
| Profit before tax | ₹169 cr | ₹368 cr | -54.03% | +212.50% |
| Tax | ₹49 cr | ₹119 cr | -58.91% | +183.24% |
| Net profit | ₹120 cr | ₹249 cr | -51.70% | +226.22% |
| EPS (₹) | ₹1.87 | ₹3.80 | -50.79% | +246.30% |
Operating margin of 25.35% compares with a Consumer Discretionary sector median of 12.67% across 105 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -6.10% | -5.83% |
Volume on the results session was 9.49× its 20-day average.
What to watch
- Whether operating margin recovers from 25.35% after two consecutive quarterly declines.
- Whether expense growth falls below revenue growth after the current year-on-year gap of 18.53% versus 14.54%.
- Whether other income remains a material contributor after accounting for 26.8% of profit before tax.