Garware Hi-Tech margin drops 5.72 points sequentially
Costs rose +17.21% QoQ against +8.55% revenue growth, while other income contributed 26.42% of pre-tax profit.
Filed 22 Oct 2026, 12:07 IST · Garware Hi Tech Films Ltd (GRWRHITECH)
Key takeaways
- Standalone operating margin fell 5.72 percentage points QoQ to 22.73%, as expenses grew +17.21% against revenue growth of +8.55%.
- Revenue rose +23.89% YoY and operating profit increased +42.96%, lifting operating margin by 3.03 percentage points.
- Other income contributed 26.42% of pre-tax profit, while a 3.96-percentage-point QoQ fall in the tax rate supported +10.50% sequential net-profit growth.
Price around the results
YoY profit conversion stayed strong, but sequential momentum weakened
On a standalone basis, revenue grew +23.89% YoY, while operating profit rose +42.96%, showing better operating conversion than a year ago. Sequentially, revenue increased +8.55% but operating profit fell -13.24%, reflecting the sharp margin compression. Net profit still grew +10.50% QoQ as other income and the lower tax rate more than offset the operating decline.
Higher costs drove the QoQ margin reversal
Expenses grew +17.21% QoQ, twice the pace of revenue growth, reducing operating margin by 5.72 percentage points. Against Q2FY26, expenses grew +19.21%, slower than the +23.89% revenue increase, helping margin expand by 3.03 percentage points. Other income was 26.42% of pre-tax profit, making reported profit less dependent on operations; the tax rate also fell 3.96 percentage points QoQ, although it was 1.51 percentage points higher YoY.
Margin remains above industrial peers after two quarters of improvement
The 22.73% operating margin was 11.70 percentage points above the 11.03% median for 19 Industrials peers that had reported the quarter. The margin had improved from 14.65% in Q3FY26 to 23.23% in Q4FY26 and 28.45% in Q1FY27, so Q2FY27 marks a reversal after two consecutive quarters of sequential improvement. It remains above the Q4FY26 level and above the year-ago margin.
Management raises margin guidance as TPU capacity approaches commissioning
Management said it raised FY27 EBITDA margin guidance to 27% ±2% and reaffirmed a revenue target of more than Rs 2,500 cr. The company said the TPU line is expected to become operational in Q3FY27, with further capacity additions underway. Management also said it expanded customer engagement and distribution during the quarter, while identifying tariff-related impact in its FY27 performance framework.
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 | YoY |
|---|---|---|---|---|
| Revenue | ₹634 cr | ₹584 cr | +8.55% | +23.89% |
| Other income | ₹47 cr | ₹16 cr | +191.50% | +8.84% |
| Expenses | ₹490 cr | ₹418 cr | +17.21% | +19.21% |
| Operating profit | ₹144 cr | ₹166 cr | -13.24% | +42.96% |
| Operating margin (%) | 22.73% | 28.45% | — | — |
| Interest | ₹2 cr | ₹2 cr | +3.97% | +23.62% |
| Depreciation | ₹13 cr | ₹13 cr | +1.76% | +21.03% |
| Profit before tax | ₹177 cr | ₹168 cr | +4.97% | +33.81% |
| Tax | ₹37 cr | ₹42 cr | -11.86% | +44.31% |
| Net profit | ₹140 cr | ₹127 cr | +10.50% | +31.31% |
| EPS (₹) | ₹60.20 | ₹54.49 | +10.48% | +31.30% |
Operating margin of 22.73% compares with a Industrials sector median of 11.03% across 19 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +0.24% | +0.78% |
Volume on the results session was 10.06× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- During the quarter, the company strengthened customer engagement and expanded its distribution network.
Guidance & outlook
- The company raised FY27 EBITDA margin guidance to 27% ±2%.
- The company reaffirmed its FY27 revenue target of more than ₹2,500 crore.
Expansion
- The TPU line is expected to become operational in Q3 FY27, with further capacity additions underway.
Competition
- The company says the economy segment is mainly dominated by Chinese and Korean players.
Problems & risks
- The company said its performance was delivered despite significant headwinds.
- The company identified a tariff-related impact in its FY27 performance framework.
What to watch
- Whether standalone operating margin holds above 22.73% after the 5.72-percentage-point QoQ decline.
- The company’s progress against its stated FY27 EBITDA margin guidance of 27% ±2%.
- Whether the TPU line becomes operational in Q3FY27 as management said.