Sarda Energy’s margin rebounds, but profit falls 18.29% sequentially
Costs fell faster than revenue and lifted margin, but lower other income and a higher tax rate pulled profit down from Q3FY26.
Filed 23 May 2026, 15:39 IST · after market close · Sarda Energy & Minerals Ltd (SARDAEN)
Key takeaways
- Consolidated operating margin recovered 3.37 percentage points sequentially to 27.73% as expenses fell 6.13% against a 1.76% revenue decline.
- Consolidated net profit rose 54.56% year on year, helped by a 8.74 percentage-point drop in the tax rate and a 23.56% fall in interest costs.
- The stock fell 4.30% on the results day, close to its 4.07% median absolute move after the past eight results.
Price around the results
Margin recovery did not prevent a sequential profit decline
Sarda Energy & Minerals reported consolidated net profit of Rs 155.15 cr in Q4FY26, down 18.29% sequentially despite operating profit rising 11.82%. The gap came below operating profit: other income fell 81.4%, interest fell 16.8%, and the tax rate rose 3.63 percentage points to 30.88%. Other income contributed 8.35% of pre-tax profit, so its sharp sequential decline materially reduced earnings quality relative to Q3FY26.
Lower costs lifted the quarterly operating margin
Revenue declined 1.76% sequentially, but expenses fell 6.13%, allowing operating margin to expand 3.37 percentage points to 27.73%. Year on year, revenue grew 1.19% while expenses fell 6.43%, lifting margin by 5.89 percentage points and operating profit by 28.44%. The lower 30.88% tax rate versus 39.62% a year earlier also supported the 54.56% increase in net profit.
Margin remains above peers after a two-quarter slide
Operating margin has recovered from 24.36% in Q3FY26, but remains below 33.50% in Q2FY26 and 37.79% in Q1FY26 after the sharp first-half decline. It was 8.96 percentage points above the 18.77% median for the 51 Commodities peers that had reported the quarter. Management said planned maintenance at one 300 MW thermal turbine affected Q3 and Q4 performance, while a 30 MW captive power unit at the steel plant was shut for replacement in Q4.
Management outlines a larger energy and mining platform
Management said it plans to double thermal capacity to four 300 MW units by FY30 and expects total energy capacity to reach 1,720.50 MW and coal mining capacity 7.10 MTPA by then. The company said ongoing projects total 791 MW of energy capacity and 5.30 MTPA of coal mining capacity, while environmental clearance for the planned SKS Power expansion is in process. Management also said the board approved a 1.1 MT pellet-capacity expansion at an approximate investment of Rs 500 cr and is targeting a doubling of EBITDA by FY30 through capacity expansion.
The market reaction was broadly in line with the stock’s history
The stock fell 4.30% on the results day, with volume at 2.54 times its usual level, and was down 8.45% after five sessions. Its reaction history shows six declines and two rises across eight results, with a median absolute move of 4.07%, making the initial fall slightly larger than usual rather than an outlier.
Q4FY26 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q4FY26 | Q3FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹1,254 cr | ₹1,276 cr | -1.76% | +1.19% |
| Other income | ₹19 cr | ₹101 cr | -81.40% | -64.16% |
| Expenses | ₹906 cr | ₹965 cr | -6.13% | -6.43% |
| Operating profit | ₹348 cr | ₹311 cr | +11.82% | +28.44% |
| Operating margin (%) | 27.73% | 24.36% | — | — |
| Interest | ₹54 cr | ₹64 cr | -16.80% | -23.56% |
| Depreciation | ₹88 cr | ₹86 cr | +2.38% | +1.93% |
| Profit before tax | ₹224 cr | ₹261 cr | -13.99% | +35.03% |
| Tax | ₹69 cr | ₹71 cr | -2.50% | +5.27% |
| Net profit | ₹155 cr | ₹190 cr | -18.29% | +54.56% |
| EPS (₹) | ₹4.48 | ₹5.40 | -17.04% | +45.93% |
Operating margin of 27.73% compares with a Commodities sector median of 18.77% across 51 peers that have reported Q4FY26.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -4.30% | -5.62% |
| Next session | -6.24% | — |
| 5 sessions | -8.45% | -7.46% |
| 15 sessions | -7.89% | — |
| 30 sessions | -13.48% | — |
Volume on the results session was 2.54× 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.
This quarter
- SEML reported its highest-ever annual thermal and hydro power generation and sales in FY26.
- SEML reported its highest-ever annual production of iron ore pellets, sponge iron and H.B. wire in FY26.
Guidance & outlook
- SEML plans to double thermal capacity to four 300 MW units by FY30.
- SEML expects total energy capacity to reach 1,720.50 MW and coal mining capacity to reach 7.10 MTPA by FY30.
- SEML is targeting a doubling of EBITDA by FY30 through disciplined and profitable capacity expansion.
Expansion
- SEML has ongoing projects totaling 791 MW of energy capacity and 5.30 MTPA of coal mining capacity.
- Environmental clearance for the planned SKS Power expansion is in process.
- The Board approved a 1.1 MT expansion of pellet manufacturing capacity at an approximate investment of Rs 500 crore.
Problems & risks
- Q3 and Q4 FY26 performance was affected by a planned maintenance shutdown of one 300 MW thermal turbine.
- Q4 FY26 performance was affected by a planned shutdown of a 30 MW captive power unit at the steel plant for replacement.
What to watch
- Whether operating margin holds above 27.73% after the maintenance-related disruptions cited for Q3 and Q4FY26.
- Whether other income remains a limited contributor after accounting for 8.35% of Q4FY26 pre-tax profit.
- Progress on the 791 MW of ongoing energy projects and 5.30 MTPA of ongoing coal-mining capacity disclosed by management.