Tax-rate reversal lifted GRP profit as costs outpaced revenue
Revenue momentum remained positive, but raw-material costs and higher interest narrowed operating margin; management expects Pyrova Energy to improve profitability as it scales.
Filed 28 Oct 2026, 18:24 IST · after market close · GRP Ltd (GRPLTD)
Key takeaways
- Consolidated revenue grew 9.89% QoQ, but expenses grew 10.41%, trimming operating margin by 0.42 percentage points.
- Net profit rose 51.90% QoQ as the tax rate fell 22.06 percentage points to 28.03%.
- At 10.36%, operating margin was 0.63 percentage points below the 10.99% median of 48 Industrials peers.
Price around the results
Revenue grew faster, but operating leverage weakened
Consolidated revenue increased 9.89% QoQ to Rs 172.34 cr, while operating profit grew 5.62% to Rs 17.85 cr. Expenses rose 10.41%, faster than revenue, so operating margin fell 0.42 percentage points to 10.36%. The result shows positive sequential sales momentum without equivalent conversion into operating profit.
Raw-material pressure cut margin; tax drove the profit jump
Management said elevated raw-material costs continued to pressure gross margins, with higher virgin rubber prices and competition for key inputs adding to value-chain costs. Interest expense also increased 5.05% QoQ, adding to the pressure below operating profit. Net profit nevertheless rose 51.90% because the tax rate dropped to 28.03% from 50.09%; other income contributed only 4.18% of pre-tax profit, so it was not the main profit-quality issue.
Margin trails the Industrials peer median
GRP's 10.36% operating margin was 0.63 percentage points below the 10.99% median for the 48 Industrials peers that had reported the quarter. Sequentially, this was a margin decline from 10.78% in Q1FY27, while the available quarter trend does not establish a longer multi-quarter direction.
Management links future improvement to Pyrova and new products
Management said profitability is expected to improve as Pyrova Energy operations scale up, after commissioning a 15KTPA single-line reactor and an integrated crumb-rubber facility in Phase 1. The company said Phase 2 includes a recovered carbon black facility and a planned increase in tyre-pyrolysis capacity to 45KTPA by March 2027. Management also said a new low-cost, high-margin reclaim product is set to launch, while the Gujarat solar project is expected to provide additional annual savings of Rs 3–4 cr.
No market reaction yet after the evening filing
The consolidated results were filed after market close on 28 October 2026. No post-results market reaction is covered yet.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹172 cr | ₹157 cr | +9.89% |
| Other income | ₹0 cr | ₹0 cr | -19.57% |
| Expenses | ₹154 cr | ₹140 cr | +10.41% |
| Operating profit | ₹18 cr | ₹17 cr | +5.62% |
| Operating margin (%) | 10.36% | 10.78% | — |
| Interest | ₹4 cr | ₹4 cr | +5.05% |
| Depreciation | ₹5 cr | ₹5 cr | +4.21% |
| Profit before tax | ₹9 cr | ₹8 cr | +5.35% |
| Tax | ₹2 cr | ₹4 cr | -41.09% |
| Net profit | ₹6 cr | ₹4 cr | +51.90% |
| EPS (₹) | ₹11.96 | ₹7.87 | +51.97% |
Operating margin of 10.36% compares with a Industrials sector median of 10.99% across 48 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.
Guidance & outlook
- Profitability is expected to improve as Pyrova Energy operations scale up.
- The Gujarat solar project is expected to deliver additional annual savings of Rs. 3–4 Cr.
- GRP plans to focus on procurement resilience, operational efficiencies, pricing discipline and technology-led improvements.
- GRP is set to launch a new low-cost, high-margin reclaim product developed in-house.
Expansion
- Pyrova Energy commissioned a 15KTPA single-line continuous reactor and an integrated crumb rubber facility in Phase 1.
- Phase 2 includes a recovered carbon black facility in Solapur and increasing tyre pyrolysis capacity to 45KTPA by March 2027.
- Phase 3 plans an integrated Gujarat facility for crumb rubber, tyre pyrolysis oil and recovered carbon black by December 2027.
- Reclaim rubber capacity is planned to increase from approximately 88KTA to 110KTA between FY27 and FY30.
New initiatives
- Sales from newer reclaim technologies increased, indicating progress in adoption and potential conversion-economics improvement.
- GRP is pursuing sourcing diversification, material optimisation and calibrated pricing actions for Pyrova Energy.
- GRP is setting up a greenfield project for crumb rubber and downstream solutions adjacent to its reclaim rubber unit.
- GRP is identifying and developing technologies for opportunities across the recycling value chain.
- Phase 1 of the Gujarat solar project has been completed, with further savings expected after Phase 2.
Problems & risks
- Elevated raw material costs continue to pressure gross margins.
- Global passenger and light-truck original equipment tyre demand remained subdued, particularly in China.
- Geopolitical tensions kept energy and freight costs elevated.
- Rising virgin rubber prices and stronger competition for key raw materials increased value-chain cost pressures in India.
- Certain raw material cost increases weighed on gross margins in the Pyrova Energy business.
What to watch
- Whether operating margin holds near 10.36% while raw-material costs remain a stated pressure.
- Whether the tax rate stays below the previous quarter's 50.09%.
- Management's reported progress on Pyrova Energy's 15KTPA reactor and the stated plan to reach 45KTPA by March 2027.