KMEW profit plunges 72% QoQ as operating margin drops 27.43 pp
Standalone revenue fell 44.05% while expenses declined only 4.25%; other income supplied 43.33% of pre-tax profit.
Filed 06 Nov 2026, 13:31 IST · Knowledge Marine & Engineering Works Ltd (KMEW)
Key takeaways
- Standalone operating margin fell 27.43 percentage points QoQ to 34.03% as revenue dropped 44.05% while expenses fell only 4.25%.
- Net profit declined 72.00% QoQ, while the tax rate rose 20.76 percentage points to 24.01%.
- Other income contributed 43.33% of pre-tax profit, even as the 34.03% operating margin remained 16.05 percentage points above the Services peer median.
Price around the results
Revenue contraction overwhelms operating performance
KMEW's standalone revenue fell 44.05% QoQ, while operating profit declined 69.03%. Expenses decreased only 4.25%, so the much sharper revenue fall caused operating margin to narrow by 27.43 percentage points. The result marks a steep reversal from the previous quarter's operating momentum.
Tax and other income shaped reported profit
The tax rate rose to 24.01% from 3.25%, a 20.76-percentage-point increase that further reduced the conversion of pre-tax profit into net profit. Other income accounted for 43.33% of pre-tax profit, making reported earnings less dependent on operating profit in this quarter. Interest expense fell 38.57% QoQ, but that benefit was outweighed by the operating decline and higher tax rate.
Margin remains above the Services peer median
KMEW's 34.03% operating margin was 16.05 percentage points above the 17.98% median for the 60 Services peers that had reported the quarter. Sequentially, however, margin fell from 61.46% to 34.03%, extending the decline across the two quarters shown. There is no year-on-year comparison in this release.
Management outlines larger dredging and fleet projects
Management said it is targeting a shift toward larger, higher-value dredging contracts and an additional 12,000 m³ of hopper capacity. The presentation also said 10 electric ferries are planned for construction at the Saphale shipyard, while the company has an order for three 60-ton bollard-pull green tugs. Management described maintenance dredging in India as a foreign-player-dominated market that it is now entering.
Shares rise on the result date
The stock rose 4.22% on 6 November, with a 1.96% opening gap and volume at 7.81 times the reference level. A corporate-action overlap was flagged for the session, so the day's move cannot be attributed cleanly to the results alone.
Q2FY27 at a glance
Standalone figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹65 cr | ₹115 cr | -44.05% |
| Other income | ₹10 cr | ₹3 cr | +206.31% |
| Expenses | ₹43 cr | ₹44 cr | -4.25% |
| Operating profit | ₹22 cr | ₹71 cr | -69.03% |
| Operating margin (%) | 34.03% | 61.46% | — |
| Interest | ₹3 cr | ₹5 cr | -38.57% |
| Depreciation | ₹6 cr | ₹6 cr | -0.48% |
| Profit before tax | ₹22 cr | ₹63 cr | -64.35% |
| Tax | ₹5 cr | ₹2 cr | +163.73% |
| Net profit | ₹17 cr | ₹61 cr | -72.00% |
| EPS (₹) | ₹1.38 | ₹24.87 | -94.45% |
Operating margin of 34.03% compares with a Services sector median of 17.98% across 60 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | +4.22% | +2.21% |
Volume on the results session was 7.81× its 20-day average.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
Guidance & outlook
- The company is targeting a transition toward larger, higher-value dredging contracts.
Expansion
- The company is targeting an additional 12,000 m³ of hopper capacity for its dredging fleet.
- The 10 electric ferries are planned to be constructed at the company's Saphale shipyard.
New orders
- The company has an order to construct three 60-ton bollard-pull green tugs.
New initiatives
- The company is strategically entering India's foreign-player-dominated maintenance dredging market.
Competition
- India's maintenance dredging market is described as foreign-player-dominated.
Problems & risks
- The company identifies India's maintenance dredging market as foreign-player-dominated.
What to watch
- Whether operating margin improves from 34.03% after the 27.43-percentage-point QoQ fall.
- Whether other income's 43.33% share of pre-tax profit declines.
- Progress on management's stated target of 12,000 m³ of additional hopper capacity and the three 60-ton green tugs.