Shadowfax profit barely rises as interest costs jump; stock falls 7.64%
Revenue growth did not translate into margin expansion, while other income supplied 28.26% of pre-tax profit and tax remained zero.
Filed 29 Oct 2026, 13:51 IST · Shadowfax Technologies Ltd (SHADOWFAX)
Key takeaways
- Standalone revenue grew 13.34% quarter on quarter, but operating margin stayed at 6.79% as expenses grew at the same pace.
- Net profit rose only 1.66% sequentially as interest costs increased 32.09%, while the zero tax rate supported reported earnings.
- The stock fell 7.64% on 30 October, while Shadowfax's 6.79% margin was 14.71 percentage points below the Services peer median.
Price around the results
Revenue grew, but operating leverage did not
Shadowfax reported standalone revenue growth of 13.34% sequentially in Q2FY27, with operating profit increasing 13.41%. Expenses also grew 13.34%, leaving operating margin unchanged at 6.79%. The quarter therefore brought scale without operating-margin expansion.
Higher interest absorbed the operating profit gain
Interest costs rose 32.09% quarter on quarter, compared with 17.66% growth in depreciation, so pre-tax profit increased only 1.66%. Other income contributed 28.26% of pre-tax profit, and the zero tax rate meant reported net profit was equal to pre-tax profit. This makes earnings quality more dependent on non-operating income and the tax line than the operating-profit growth alone suggests.
Margin remains below the Services peer set
Shadowfax's 6.79% operating margin was 14.71 percentage points below the 21.5% median for the 53 Services companies that had reported the same quarter. With only Q1FY27 available in the trend, the margin was flat sequentially rather than extending a decline. No year-on-year comparison is provided.
Expansion continued across the delivery network
Management said three large-format sort centres were commissioned in Delhi NCR, Bengaluru and Surat, while middle-mile space rose from 24 lakh square feet in Q1FY27 to more than 34 lakh square feet in Q2FY27. The company said it had invested an incremental Rs 38 cr in capital advances for facilities expected to be commissioned in H2FY27, and expects full-year capex at 3.8%-4.0% of revenue. Management also said it is on track for more than 100 dark stores by FY27 and has deployed an in-house AI-led optimisation engine across the network.
The initial market reaction was sharply negative
The stock fell 7.64% on 30 October, with trading volume at 1.88 times the reference level. That reaction followed a quarter in which revenue rose but net profit increased only 1.66%, with interest up 32.09% and other income accounting for 28.26% of pre-tax profit.
Q2FY27 at a glance
Standalone figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹1,501 cr | ₹1,324 cr | +13.34% |
| Other income | ₹19 cr | ₹21 cr | -9.56% |
| Expenses | ₹1,399 cr | ₹1,234 cr | +13.34% |
| Operating profit | ₹102 cr | ₹90 cr | +13.41% |
| Operating margin (%) | 6.79% | 6.79% | — |
| Interest | ₹10 cr | ₹7 cr | +32.09% |
| Depreciation | ₹44 cr | ₹37 cr | +17.66% |
| Profit before tax | ₹67 cr | ₹66 cr | +1.66% |
| Tax | ₹0 cr | ₹0 cr | — |
| Net profit | ₹67 cr | ₹66 cr | +1.66% |
| EPS (₹) | ₹1.14 | ₹1.13 | +0.88% |
Operating margin of 6.79% compares with a Services sector median of 21.50% across 53 peers that have reported Q2FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -7.64% | -8.15% |
| Next session | -7.29% | — |
Volume on the results session was 1.88× 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
- The company scaled its middle-mile footprint 1.4 times quarter on quarter.
Guidance & outlook
- The company expects full-year capex to be 3.8-4.0% of revenue.
- The company is on track to operate more than 100 dark stores by FY27.
Expansion
- Three large-format sort centers were commissioned in Delhi NCR, Bengaluru and Surat.
- Middle-mile space increased from 24 lakh square feet in Q1 FY27 to more than 34 lakh square feet in Q2 FY27.
- The company added about 10 lakh square feet of middle-mile space in the quarter.
- The company invested an incremental INR 38 crore in capital advances for facilities expected to be commissioned in H2 FY27.
- The company plans to dedicate 15-20% of its new footprint this quarter to micro-fulfillment centers.
New products
- Prime large currently covers furniture, mattresses, luggage, kitchen appliances and white goods.
- The company has launched same-day delivery for heavy and volumetric shipments through Prime Large.
New initiatives
- The company deployed an in-house AI-led optimization engine across its network ahead of the festive season.
- The company plans to bring two mega sorters and volume profilers online in Q4.
Problems & risks
- Daily lane-volume variations occur across the nationwide mesh network.
- The speed-oriented network requires daily connections regardless of shipment volumes.
What to watch
- Whether operating margin holds at 6.79% as the network footprint expands.
- Whether interest-cost growth moderates from 32.09% quarter on quarter.
- Progress toward more than 34 lakh square feet of middle-mile space and the stated target of more than 100 dark stores by FY27.