Margin rose 2.24 points as Harsha's Q2 revenue slipped
Expenses fell faster than revenue, while a lower tax rate and higher other income supported the 20.47% QoQ rise in consolidated net profit.
Filed 03 Nov 2026, 16:01 IST · after market close · Harsha Engineers International Ltd (HARSHA)
Key takeaways
- Consolidated operating margin widened 2.24 percentage points QoQ to 16.99% as expenses fell faster than revenue.
- Net profit rose 20.47% QoQ despite a 3.79% revenue decline, although other income accounted for 11.53% of pre-tax profit.
- Management said Harsha Advantek, which reported a Rs 3 cr Q2 loss, is expected to become PAT positive in H2 FY27.
Price around the results
Lower costs offset softer sequential revenue
Consolidated revenue declined 3.79% QoQ, but expenses fell 6.32%, allowing operating profit to rise 10.84%. The faster cost reduction widened operating margin by 2.24 percentage points to 16.99%. Management also said new varieties of stampings commercialised during the year contributed to the business.
Profit growth included non-operating support
Net profit increased 20.47% QoQ as pre-tax profit rose 15.98%, despite interest increasing 5.32% and depreciation rising 3.34%. Other income grew 37.40% and represented 11.53% of pre-tax profit, so part of the profit improvement came from outside operations. The tax rate fell 2.73 percentage points, also supporting net profit growth.
Margin remained above the Industrials peer median
Harsha's 16.99% operating margin was 5.95 percentage points above the 11.04% median for 93 Industrials peers that had reported the same quarter. Sequentially, the available trend shows a recovery from the 14.75% margin recorded in Q1FY27. There is not enough quarter history here to establish a longer margin direction.
Expansion continues while overseas units weigh
Management said the Harsha Advantek and Harsha China brownfield expansion projects remain on track, and that consolidated capex was Rs 72 cr in H1 FY27. It also said Harsha Romania continued to report negative EBITDA and PAT in Q2 and H1 FY27, with a downsizing and cost-reduction strategy being implemented. Management said Advantek is expected to become PAT positive in H2 FY27, backed by expected sales growth.
Results were filed after market close
The company filed its consolidated Q2FY27 results after market close on 03 Nov 2026. The release-day read therefore does not include a market response.
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 | ₹440 cr | ₹457 cr | -3.79% |
| Other income | ₹7 cr | ₹5 cr | +37.40% |
| Expenses | ₹365 cr | ₹390 cr | -6.32% |
| Operating profit | ₹75 cr | ₹67 cr | +10.84% |
| Operating margin (%) | 16.99% | 14.75% | — |
| Interest | ₹6 cr | ₹6 cr | +5.32% |
| Depreciation | ₹14 cr | ₹14 cr | +3.34% |
| Profit before tax | ₹61 cr | ₹53 cr | +15.98% |
| Tax | ₹16 cr | ₹16 cr | +5.25% |
| Net profit | ₹45 cr | ₹37 cr | +20.47% |
| EPS (₹) | ₹4.95 | ₹4.11 | +20.44% |
Operating margin of 16.99% compares with a Industrials sector median of 11.04% across 93 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
- Harsha Advantek is expected to become PAT positive in H2 FY 2027, backed by strong expected sales growth.
Expansion
- The Harsha Advantek and Harsha China brownfield expansion projects are on track.
- The company incurred consolidated capex of Rs. 72 crores in H1 FY 2027.
New products
- New varieties of stampings were commercialised during the year.
New initiatives
- Harsha Romania is implementing a strategy to downsize operations with corresponding cost reductions.
Competition
- The company states that it is the largest manufacturer of precision bearing cages in India.
- The company supplies products to each of the six largest global bearing manufacturers listed in the presentation.
Problems & risks
- Harsha Advantek reported a loss of Rs. 3 crores in Q2 FY 2027.
- Harsha Romania continued to underperform, reporting negative EBITDA and PAT in Q2 and H1 FY 2027.
What to watch
- Whether consolidated operating margin holds above 16.99%.
- Whether other income remains below 11.53% of pre-tax profit.
- Whether Harsha Advantek's reported Rs 3 cr Q2 loss narrows or turns positive.