Expenses outpaced revenue, slicing Knack’s operating margin by 8.07 points
Sequential profit fell 18.05% as costs grew twice as fast as revenue, while other income supplied 21.45% of pre-tax profit.
Filed 27 Oct 2026, 19:54 IST · after market close · Knack Packaging Ltd (KNACK)
Key takeaways
- Revenue grew 12.31% sequentially, but expenses rose 23.88%, pulling operating margin down 8.07 percentage points.
- Net profit fell 18.05% sequentially to Rs 25.02 cr despite a 2.72-percentage-point decline in the tax rate.
- Other income contributed 21.45% of pre-tax profit, making reported earnings less dependent on operations.
Price around the results
Q2 growth came with a sharp margin trade-off
In consolidated results, revenue rose 12.31% sequentially, but expenses increased 23.88%. That cost gap reduced operating profit by 29.55% and narrowed operating margin by 8.07 percentage points to 13.59%. Net profit declined 18.05%, while EPS fell 32.13% to Rs 2.07.
Lower tax softened the profit decline, but other income was material
The tax rate fell 2.72 percentage points to 24.32%, which cushioned the fall in pre-tax profit. Other income accounted for 21.45% of pre-tax profit, so reported earnings included a meaningful non-operating contribution. Interest expense fell 3.97%, but that saving was not enough to offset the faster rise in expenses.
Margin remained above the reported Industrials peer median
Knack’s 13.59% operating margin was 2.56 percentage points above the 11.03% median for 39 Industrials peers that had reported the same quarter. Sequentially, however, margin moved down from 21.66%, marking a steep deterioration within the two-quarter trend available here.
Expansion plans extend beyond the current quarter
Management said the Mexico joint-venture plant was commissioned in April 2026 and has operated one pinch-bottom machine since then. The company said it plans to commission a new facility that would increase effective capacity by October 2027, while also expanding its presence in Europe, Australia, the Gulf and Africa. Management also said it is expanding into Modern Trend Packaging and plans solar installations for the proposed manufacturing facility.
Results were filed after market close
The consolidated results were filed after market close on 27 October 2026. The filing timing means the market response is not covered in this update.
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 | ₹295 cr | ₹262 cr | +12.31% |
| Other income | ₹7 cr | ₹-1 cr | — |
| Expenses | ₹255 cr | ₹206 cr | +23.88% |
| Operating profit | ₹40 cr | ₹57 cr | -29.55% |
| Operating margin (%) | 13.59% | 21.66% | — |
| Interest | ₹4 cr | ₹4 cr | -3.97% |
| Depreciation | ₹10 cr | ₹10 cr | +3.65% |
| Profit before tax | ₹33 cr | ₹42 cr | -20.98% |
| Tax | ₹8 cr | ₹11 cr | -28.91% |
| Net profit | ₹25 cr | ₹31 cr | -18.05% |
| EPS (₹) | ₹2.07 | ₹3.05 | -32.13% |
Operating margin of 13.59% compares with a Industrials sector median of 11.03% across 39 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
- The company plans to commission a new facility that will increase effective capacity by October 2027.
- The company plans to increase its presence in Europe, Australia, the Gulf and Africa.
Expansion
- The Mexico joint venture plant was commissioned in April 2026.
- The Mexico plant commissioned one pinch-bottom machine from April 2026.
New products
- The company is expanding into Modern Trend Packaging.
New initiatives
- Solar installations are planned for the proposed manufacturing facility.
What to watch
- Whether operating margin holds above 13.59% after the 8.07-percentage-point sequential decline.
- Whether expense growth moves below the current 23.88% sequential pace.
- Whether other income remains a material contributor after accounting for 21.45% of pre-tax profit.