IndoStar profit rises despite a 2.12-point margin squeeze
Lower interest cost supported profit growth, but expenses grew faster than revenue and operating margin stayed below the sector median.
Filed 29 Oct 2026, 16:27 IST · after market close · Indostar Capital Finance Ltd (INDOSTAR)
Key takeaways
- Consolidated net profit rose 14.91% QoQ to Rs 13.18 cr even as operating margin narrowed 2.12 percentage points.
- Expenses grew 8.94% QoQ against 4.97% revenue growth, reducing operating profit by 0.11%.
- Operating margin at 41.70% was 17.83 percentage points below the 59.53% median for 58 reported financial-services peers.
Price around the results
Profit growth came from lower interest cost
IndoStar's consolidated net profit rose 14.91% QoQ to Rs 13.18 cr, while revenue grew 4.97% to Rs 381.97 cr. Interest expense fell 3.28%, helping profit before tax increase 14.90% despite operating profit being broadly flat. Other income contributed only 0.91% of pre-tax profit, so earnings were not materially supported by that line.
Costs outpaced revenue and narrowed the operating margin
Expenses increased 8.94% QoQ, faster than the 4.97% revenue increase, which reduced operating profit by 0.11%. Operating margin fell from 43.82% in Q1FY27 to 41.70%, a decline of 2.12 percentage points. The 0.08% tax rate also kept almost all pre-tax profit in net profit, making the reported tax charge a further support to earnings.
Margin remains below the reported peer median
IndoStar's 41.70% operating margin was 17.83 percentage points below the 59.53% median among 58 Financial Services companies that had reported the same quarter. The only prior quarter in the trend shows a sequential margin decline from 43.82% to 41.70%, rather than a sustained multi-quarter direction. The results were filed after market close, so there is no market reaction to assess yet.
Management targets automated lending processes by March 2027
Management said it is targeting straight-through processing for car and SCV lending by March 2027. This is the only disclosed operating target in the presentation and provides a specific milestone to track alongside the cost and margin movement.
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 | ₹382 cr | ₹364 cr | +4.97% |
| Other income | ₹0 cr | ₹3 cr | -95.79% |
| Expenses | ₹223 cr | ₹204 cr | +8.94% |
| Operating profit | ₹159 cr | ₹159 cr | -0.11% |
| Operating margin (%) | 41.70% | 43.82% | — |
| Interest | ₹140 cr | ₹144 cr | -3.28% |
| Depreciation | ₹7 cr | ₹6 cr | +1.86% |
| Profit before tax | ₹13 cr | ₹11 cr | +14.90% |
| Tax | ₹0 cr | ₹0 cr | +0.00% |
| Net profit | ₹13 cr | ₹11 cr | +14.91% |
| EPS (₹) | ₹0.82 | ₹0.71 | +15.49% |
Operating margin of 41.70% compares with a Financial Services sector median of 59.53% across 58 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
- IndoStar targets straight-through processing for car and SCV lending by March 2027.
What to watch
- Whether operating margin recovers from 41.70% in the next quarter.
- Whether expense growth falls below the 4.97% QoQ revenue-growth rate.
- Progress toward management's target of straight-through processing for car and SCV lending by March 2027.