Epigral margin drops 7.16 points as costs outpace revenue growth
Q2FY27 revenue rose 5.76% sequentially, but higher expenses and interest drove a 34.75% fall in net profit; management cited raw-material pressure.
Filed 02 Nov 2026, 13:52 IST · Epigral Ltd (EPIGRAL)
Key takeaways
- Consolidated operating margin fell 7.16 percentage points sequentially to 18.25% as expenses grew 15.91%, faster than revenue at 5.76%.
- Net profit declined 34.75% sequentially to Rs 65.08 cr, with interest expense rising 49.31% and other income contributing 7.40% of pre-tax profit.
- Despite the margin decline, Epigral's 18.25% operating margin was 3.02 percentage points above the 15.23% median for 63 reported Commodities peers.
Price around the results
Revenue growth did not translate into operating profit
Epigral's consolidated revenue increased 5.76% sequentially to Rs 745.99 cr, but operating profit fell 24.05% to Rs 136.11 cr. Management attributed the quarter's reported 28% revenue growth to volume growth and improved realisations. The company also described Q2FY27 as a challenging operating environment.
Raw-material costs and interest compressed earnings
Expenses rose 15.91% sequentially, nearly three times the pace of revenue growth, reducing operating margin by 7.16 percentage points to 18.25%. Management said elevated raw-material prices affected EBITDA margins. Interest expense increased 49.31%, while the tax rate changed only 0.27 percentage points, so the profit decline was driven mainly by operating costs and financing expense rather than taxation.
Margin remains above the reported peer median
Epigral's 18.25% operating margin was 3.02 percentage points above the 15.23% median among 63 reported Commodities peers. Sequentially, however, the direction was sharply weaker: profit before tax fell 34.51% and net profit fell 34.75%. Other income was 7.40% of pre-tax profit, providing a limited contribution to earnings quality rather than explaining the quarter's main movement.
Management points to H2 demand and new capacity
Management said it remains positive on H2FY27 and expects Indian demand for Epoxy Resin and Formulations to grow at a double-digit percentage rate. The company told investors that its board approved an Epoxy Resin and Formulations plant with 125,000 TPA capacity and a Multi-Purpose Plant, with the projects expected to commission in H2FY28. Management also said domestic Caustic Soda demand is expected to reach 5.0 million tonnes by FY2027.
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 | ₹746 cr | ₹705 cr | +5.76% |
| Other income | ₹6 cr | ₹5 cr | +39.06% |
| Expenses | ₹610 cr | ₹526 cr | +15.91% |
| Operating profit | ₹136 cr | ₹179 cr | -24.05% |
| Operating margin (%) | 18.25% | 25.41% | — |
| Interest | ₹11 cr | ₹7 cr | +49.31% |
| Depreciation | ₹44 cr | ₹43 cr | +3.10% |
| Profit before tax | ₹88 cr | ₹134 cr | -34.51% |
| Tax | ₹23 cr | ₹34 cr | -33.82% |
| Net profit | ₹65 cr | ₹100 cr | -34.75% |
| EPS (₹) | ₹15.09 | ₹23.12 | -34.73% |
Operating margin of 18.25% compares with a Commodities sector median of 15.23% across 63 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
- Q2FY27 revenue growth was driven by volume growth and improved realisations.
Guidance & outlook
- The company maintains a positive outlook for H2FY27.
- Demand for Epoxy Resin and Formulations in India is expected to grow at a double-digit percentage rate.
- Domestic Caustic Soda demand is expected to increase to 5.0 million tonnes by FY2027.
Expansion
- The board approved capex for an Epoxy Resin and Formulations plant and an MPP, expected to commission by H2FY28.
- The Epoxy Resin and Formulations plant will have capacity of 125,000 TPA.
- The Multi-Purpose Plant is expected to be commissioned in H2FY28.
New initiatives
- Epigral has set up pilot plants for Epoxy Resin and Formulations and MPP to optimise processes and facilitate customer approvals.
Competition
- Epigral states that it is the fourth-largest Caustic Soda producer in India.
- Epigral states that it is the third-largest Caustic Potash producer in India.
Problems & risks
- The company described Q2FY27 as having a challenging operating environment.
- Elevated raw material prices affected EBITDA margins.
What to watch
- Whether operating margin recovers from 18.25% after the 7.16-percentage-point sequential decline.
- Whether expense growth moderates from +15.91% relative to revenue growth of +5.76%.
- Progress on the approved 125,000 TPA Epoxy Resin and Formulations plant and the Multi-Purpose Plant ahead of the stated H2FY28 commissioning window.