Honeywell Automation's margin slips QoQ despite 21% YoY profit growth
Standalone revenue grew only +1.80% YoY, but slower expenses lifted operating margin by 2.36 percentage points; other income remained material.
Filed 29 Jul 2026, 14:10 IST · Honeywell Automation India Ltd (HONAUT)
Key takeaways
- Standalone net profit rose +20.95% YoY to Rs 150.7 cr as expenses fell -0.93% while revenue grew +1.80%.
- Operating margin fell 1.33 percentage points QoQ because expenses grew +3.61% against revenue growth of +2.01%.
- Other income contributed 22.85% of pre-tax profit, making earnings quality an important watchpoint.
Price around the results
Profit growth was driven by operating leverage YoY
Honeywell Automation India reported standalone revenue growth of +1.80% YoY, while expenses declined -0.93%, allowing operating profit to grow +21.91%. The 20.95% increase in net profit was broadly operating-led, as the tax rate changed by only -0.03 percentage points. Interest expense rose +21.05% YoY, but did not offset the improvement in operating profit.
Costs reversed the margin recovery on a sequential basis
Revenue grew +2.01% QoQ, but expenses increased faster at +3.61%, narrowing operating margin by 1.33 percentage points. Interest expense also rose +64.29% QoQ, adding pressure below the operating line. Other income accounted for 22.85% of pre-tax profit, so reported profit had meaningful non-operating support.
Margin remains above last year's level but below the sector median
Operating margin improved 2.36 percentage points YoY, but the Q1FY27 figure marked a pullback from Q4FY26's 15.65%. The quarterly trend shows a recovery from the 11.45% Q2FY26 trough through Q4, followed by a 1.33-point decline. At 14.32%, the margin was 0.32 percentage points below the 14.64% median for 27 Industrials peers that had reported.
The immediate stock reaction is still too fresh to assess
The results are too fresh for a current market reaction to be assessed. In the eight past result reactions, the stock rose three times and fell five times, with a median absolute move of 3.13%.
Q1FY27 at a glance
Standalone figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,204 cr | ₹1,181 cr | +2.01% | +1.80% |
| Other income | ₹46 cr | ₹47 cr | -0.43% | +11.00% |
| Expenses | ₹1,032 cr | ₹996 cr | +3.61% | -0.93% |
| Operating profit | ₹173 cr | ₹185 cr | -6.66% | +21.91% |
| Operating margin (%) | 14.32% | 15.65% | — | — |
| Interest | ₹2 cr | ₹1 cr | +64.29% | +21.05% |
| Depreciation | ₹14 cr | ₹15 cr | -8.16% | +0.75% |
| Profit before tax | ₹203 cr | ₹215 cr | -5.67% | +20.89% |
| Tax | ₹52 cr | ₹56 cr | -5.76% | +20.74% |
| Net profit | ₹151 cr | ₹160 cr | -5.64% | +20.95% |
| EPS (₹) | ₹170.45 | ₹180.60 | -5.62% | +20.93% |
Operating margin of 14.32% compares with a Industrials sector median of 14.64% across 27 peers that have reported Q1FY27.
What to watch
- Whether operating margin holds above 14.32% and narrows the gap to the 14.64% peer median.
- Whether sequential expense growth falls below the +2.01% revenue growth rate.
- Whether other income's 22.85% share of pre-tax profit declines.