Kusumgar's Q2 margin slips as costs outpace revenue growth
Revenue more than doubled sequentially, but higher raw-material costs and product-mix changes cut operating margin by 1.88 percentage points.
Filed 05 Nov 2026, 19:47 IST · after market close · Kusumgar Ltd (KUSUMGAR)
Key takeaways
- Consolidated Q2FY27 revenue rose +101.49% sequentially, but expenses grew +106.96%, narrowing operating margin by 1.88 percentage points.
- Net profit increased +95.19% sequentially to Rs 83.25 cr, helped by a 1.50 percentage-point fall in the tax rate.
- At 28.62%, Kusumgar's operating margin was 17.06 percentage points above the 11.56% median of 258 Consumer Discretionary peers.
Price around the results
Aerospace and defence execution drives Q2
Kusumgar's consolidated revenue rose +101.49% sequentially to Rs 498.19 cr, while net profit increased +95.19% to Rs 83.25 cr. Management said aerospace and defence solutions contract execution drove the quarter, putting Q2 revenue growth at +81% year on year, alongside steady demand in other businesses. Other income contributed 4.94% of pre-tax profit, so it was not the main source of reported earnings.
Product mix and raw materials reduce operating leverage
Expenses grew +106.96%, faster than revenue, reducing operating margin by 1.88 percentage points to 28.62%. Management said the margin change reflected product-mix changes and higher raw-material costs, while noting that price increases are usually passed on to customers with a lag. Interest rose +87.26% and depreciation increased +102.28%, adding to the pressure below operating profit.
Margin remains well above the sector median
The quarter's operating margin was 17.06 percentage points above the 11.56% median for the 258 Consumer Discretionary peers that had reported. Sequentially, margin declined from 30.50% in Q1FY27 to 28.62%, indicating weaker operating leverage despite the revenue increase. The 1.50 percentage-point reduction in the tax rate also supported the rise in net profit, while pre-tax profit grew +91.31%.
Management prioritises execution and working capital
Management said its second-half focus is timely execution, customer product qualifications and keeping working capital in check. It said H1 FY27 capex was Rs 44.1 cr, mainly for maintenance and debottlenecking, because current capacity supports the existing business. The company also said it is evaluating new technologies and capabilities, building domestic sources for critical inputs and continuing investment in technology, research and development and global partnerships.
Results were filed after market close
Kusumgar filed these consolidated results at 19:47 IST on 5 November 2026, after market close. This update therefore does not assess a post-results share-price move.
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 | ₹498 cr | ₹247 cr | +101.49% |
| Other income | ₹5 cr | ₹1 cr | +299.27% |
| Expenses | ₹356 cr | ₹172 cr | +106.96% |
| Operating profit | ₹143 cr | ₹75 cr | +89.03% |
| Operating margin (%) | 28.62% | 30.50% | — |
| Interest | ₹12 cr | ₹6 cr | +87.26% |
| Depreciation | ₹26 cr | ₹13 cr | +102.28% |
| Profit before tax | ₹111 cr | ₹58 cr | +91.31% |
| Tax | ₹27 cr | ₹15 cr | +80.39% |
| Net profit | ₹83 cr | ₹43 cr | +95.19% |
| EPS (₹) | ₹7.88 | ₹4.18 | +88.52% |
Operating margin of 28.62% compares with a Consumer Discretionary sector median of 11.56% across 258 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.
This quarter
- Aerospace and defence solutions contracts were executed at a steady pace during the quarter.
- Growth came mainly from aerospace and defence contracts, alongside steady demand in other businesses.
- Quarterly revenue was broadly in line with Q1, reflecting a more even execution pace than the previous year.
Guidance & outlook
- For the second half, management will focus on timely execution, product qualifications, and keeping working capital in check.
- The company usually passes on most raw-material price increases to customers, but with a lag.
Expansion
- H1 FY27 capex was ₹44.1 crore, mainly for maintenance and debottlenecking because current capacity supports existing business.
- The company is evaluating investments in new technologies and capabilities and will disclose significant capex when relevant.
New products
- The company commercialises new products every year across its solution families.
New initiatives
- The company is building domestic sources for critical inputs.
- The company has in-house labs for rapid prototyping, application simulation and testing.
- Much of the company’s development is conducted jointly with customers and global technology partners against specific operational requirements.
- The company continues investing in technology, R&D and global partnerships to widen capabilities.
Competition
- Specialised systems have few, if any, qualified players, while less specialised products have a wider competitive field.
Problems & risks
- Margins were affected by product-mix changes and higher raw-material costs.
- Military tender timing is uncertain, causing quarter-to-quarter performance variation.
- Specialised inputs are imported, and domestic supply does not always meet customer specifications.
- The company identifies export-market tariffs and difficulty retaining specialised technical talent as key risks.
What to watch
- Whether operating margin recovers from 28.62% after the 1.88 percentage-point sequential decline.
- Whether the tax rate stays near 24.78% without further support to net profit growth.
- Whether revenue remains above Q1FY27's Rs 247.25 cr as aerospace and defence execution continues.