Hatsun's sales rose 21.68% YoY, but costs erased operating leverage
Expenses grew faster than revenue, while lower interest and tax costs were not enough to prevent a 3.74% YoY decline in net profit.
Filed 22 Oct 2026, 18:06 IST · after market close · Hatsun Agro Product Ltd (HATSUN)
Key takeaways
- Revenue grew 21.68% YoY, but expenses grew 25.14%, cutting operating margin by 2.45 percentage points to 11.44%.
- Standalone net profit fell 3.74% YoY to Rs 115.69 cr despite interest costs declining 17.34% and the tax rate falling 1.49 percentage points.
- The stock fell 4.93% after the results, close to its 4.99% median absolute move across eight prior result reactions.
Price around the results
Sales growth did not translate into profit growth
Standalone revenue rose 21.68% YoY, but operating profit increased only 0.23% as expenses grew faster than sales. Net profit fell 3.74% to Rs 115.69 cr, while EPS declined 3.89% to Rs 5.19. Sequentially, revenue fell 6.24% and net profit fell 13.46%, indicating weaker momentum than in Q1FY27.
Expense growth drove the YoY margin squeeze
Expenses rose 25.14% YoY against 21.68% revenue growth, narrowing operating margin by 2.45 percentage points. Sequentially, expenses fell 6.34%, slightly faster than revenue, allowing margin to improve 0.09 percentage points. Operating margin has recovered from 9.13% in Q4FY26 to 11.35% in Q1FY27 and 11.44% now, but remains below 13.89% a year earlier and the 16.18% median for nine reported FMCG peers.
Lower interest and tax rates only partly offset pressure
Interest costs fell 17.34% YoY and the tax rate declined 1.49 percentage points, but depreciation increased 12.63%, leaving profit before tax down 5.63%. Other income contributed 3.18% of pre-tax profit, so it was not a major support to reported earnings. The sequential tax-rate increase of 2.47 percentage points also reduced the benefit from the modest operating-margin recovery.
The market reaction was negative but not unusual
The stock fell 4.93% after the results, with a 1.58% opening gap and 7.6 times the reference volume. The move was close to the 4.99% median absolute reaction across eight prior results, when four reactions were positive and four were negative. Its 4.54% underperformance versus the market was therefore a negative response, but not an unusually large move for this stock.
Q2FY27 at a glance
Standalone figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,898 cr | ₹3,090 cr | -6.24% | +21.68% |
| Other income | ₹5 cr | ₹3 cr | +67.82% | +19.46% |
| Expenses | ₹2,566 cr | ₹2,740 cr | -6.34% | +25.14% |
| Operating profit | ₹331 cr | ₹351 cr | -5.49% | +0.23% |
| Operating margin (%) | 11.44% | 11.35% | — | — |
| Interest | ₹31 cr | ₹32 cr | -2.06% | -17.34% |
| Depreciation | ₹153 cr | ₹151 cr | +1.00% | +12.63% |
| Profit before tax | ₹153 cr | ₹171 cr | -10.65% | -5.63% |
| Tax | ₹37 cr | ₹37 cr | -0.49% | -11.11% |
| Net profit | ₹116 cr | ₹134 cr | -13.46% | -3.74% |
| EPS (₹) | ₹5.19 | ₹6.00 | -13.50% | -3.89% |
Operating margin of 11.44% compares with a Fast Moving Consumer Goods sector median of 16.18% across 9 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -4.93% | -4.54% |
Volume on the results session was 7.60× its 20-day average.
What to watch
- Whether standalone operating margin holds above 11.44% after the 2.45-percentage-point YoY decline.
- Whether expense growth stays below revenue growth after running at 25.14% versus 21.68% YoY.
- Whether net profit improves from Rs 115.69 cr without greater reliance on other income, which was 3.18% of pre-tax profit.