HAL's Q1 profit rose YoY, but margin fell 8.60 points QoQ
Revenue grew +14.45% year on year, but sequential sales fell faster than expenses and pushed operating margin below the Q4FY26 level.
Filed 12 Aug 2026, 14:11 IST · Hindustan Aeronautics Ltd (HAL)
Key takeaways
- Consolidated net profit rose +14.88% year on year as revenue grew faster than expenses.
- Operating margin fell 8.60 percentage points sequentially because expenses declined less than revenue.
- Other income accounted for 42.72% of pre-tax profit, making reported profit quality an important watchpoint.
Price around the results
Year-on-year growth held despite higher depreciation
On a consolidated basis, revenue grew +14.45% year on year while expenses rose +12.77%, lifting operating profit by +19.06% and expanding operating margin by 1.07 percentage points. Net profit increased +14.88%, even as depreciation rose +64.15%. The slower growth in costs than revenue supported the operating improvement.
Sequential margin compression was the key weakness
Revenue fell -60.44% sequentially, while expenses declined by only -55.10%; this cost mismatch cut operating margin by 8.60 percentage points. The tax rate also rose 0.67 percentage points from Q4FY26, though the change was not the main driver of the profit decline. Other income contributed 42.72% of pre-tax profit, so reported earnings included a substantial non-operating component.
Margin remains above peers but below the recent peak
HAL's 27.68% operating margin was 13.32 percentage points above the 14.36% median for 125 Industrials peers that had reported the quarter. The quarterly trend remains uneven: margin moved from 23.50% in Q2FY26 and 24.30% in Q3FY26 to 36.28% in Q4FY26, before falling to 27.68% in Q1FY27. It was nevertheless 1.07 percentage points higher than Q1FY26.
Initial market move was larger than HAL's usual result-day reaction
The stock rose +1.75% on the results date, with trading volume at 3.48 times the reference level. That move was above the stock's median absolute reaction of 0.84% after its last eight results. The historical pattern was evenly split, with four rises and four declines.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹5,515 cr | ₹13,942 cr | -60.44% | +14.45% |
| Other income | ₹912 cr | ₹1,164 cr | -21.65% | +20.40% |
| Expenses | ₹3,988 cr | ₹8,884 cr | -55.10% | +12.77% |
| Operating profit | ₹1,527 cr | ₹5,059 cr | -69.82% | +19.06% |
| Operating margin (%) | 27.68% | 36.28% | — | — |
| Interest | ₹0 cr | ₹4 cr | -91.57% | +16.67% |
| Depreciation | ₹304 cr | ₹634 cr | -52.09% | +64.15% |
| Profit before tax | ₹2,134 cr | ₹5,584 cr | -61.78% | +15.10% |
| Tax | ₹545 cr | ₹1,388 cr | -60.75% | +15.75% |
| Net profit | ₹1,590 cr | ₹4,196 cr | -62.12% | +14.88% |
| EPS (₹) | ₹23.77 | ₹62.74 | -62.11% | +14.89% |
Operating margin of 27.68% compares with a Industrials sector median of 14.36% across 125 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +1.75% | +1.90% |
Volume on the results session was 3.48× its 20-day average.
What to watch
- Whether consolidated operating margin holds above 27.68%.
- Whether other income remains below or above its 42.72% share of pre-tax profit.
- Whether expenses continue to grow more slowly than revenue, as they did at +12.77% versus +14.45% year on year.