Eternal’s margin improves, but profit still leans on other income
Revenue growth outpaced costs YoY, while a 61.30% tax rate and other income above pre-tax profit shaped Q2FY27 earnings.
Filed 21 Oct 2026, 18:47 IST · after market close · Eternal Ltd (ETERNAL)
Key takeaways
- Consolidated revenue grew +77.62% YoY and operating margin widened 1.36 percentage points to 3.12%.
- Other income equalled 108.67% of pre-tax profit, while the 61.3% tax rate limited conversion into net profit.
- The stock fell -2.53% after the results, broadly within its 2.68% median absolute move after the past eight results.
Price around the results
Revenue growth continued to outpace costs
Eternal’s consolidated revenue grew +77.62% YoY to Rs 24,138 cr, while expenses rose +75.16%; this lifted operating margin by 1.36 percentage points to 3.12%. Sequentially, revenue increased +19.43% and expenses +19.21%, expanding operating margin by 0.18 percentage points. Operating profit growth was +214.64% YoY and +26.60% QoQ.
Profit conversion remains dependent on below-operating items
Other income contributed 108.67% of pre-tax profit, making reported profit quality a key feature of the quarter. Interest expense rose +80.23% YoY and depreciation increased +66.22%, absorbing part of the operating improvement. The tax rate rose 11.69 percentage points YoY to 61.3%, although it fell 4.88 percentage points QoQ.
Margins have risen for five straight quarters but remain below peers
Operating margin has increased from 1.60% in Q1FY26 to 3.12% in Q2FY27, marking a fifth consecutive quarterly improvement. Even so, Eternal’s margin was 9.12 percentage points below the 12.24% median for the 34 Consumer Discretionary peers that had reported. The company ranked sixth from the bottom on this measure.
The initial market reaction was within the stock’s usual range
The stock fell -2.53% in the first session after the results, with volume at 3.82 times the reference level. That decline was close to the stock’s historical post-results median absolute move of 2.68%; it has risen after five of the past eight results and fallen after three.
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 | YoY |
|---|---|---|---|---|
| Revenue | ₹24,138 cr | ₹20,211 cr | +19.43% | +77.62% |
| Other income | ₹351 cr | ₹375 cr | -6.40% | -0.28% |
| Expenses | ₹23,386 cr | ₹19,617 cr | +19.21% | +75.16% |
| Operating profit | ₹752 cr | ₹594 cr | +26.60% | +214.64% |
| Operating margin (%) | 3.12% | 2.94% | — | — |
| Interest | ₹155 cr | ₹151 cr | +2.65% | +80.23% |
| Depreciation | ₹625 cr | ₹546 cr | +14.47% | +66.22% |
| Profit before tax | ₹323 cr | ₹272 cr | +18.75% | +150.39% |
| Tax | ₹198 cr | ₹180 cr | +10.00% | +209.38% |
| Net profit | ₹125 cr | ₹92 cr | +35.87% | +92.31% |
| EPS (₹) | ₹0.14 | ₹0.10 | +40.00% | +100.00% |
Operating margin of 3.12% compares with a Consumer Discretionary sector median of 12.24% across 34 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -2.53% | -1.99% |
Volume on the results session was 3.82× its 20-day average.
What to watch
- Whether operating margin holds above 3.12% after five consecutive quarterly increases.
- Whether expenses continue to grow more slowly than revenue after the +19.21% QoQ expense increase against +19.43% revenue growth.
- Whether other income remains as large as 108.67% of pre-tax profit and whether the tax rate moves below 61.3%.