Dixon Q2 income rises 47% as operating margin drops 110 bps

Dixon reported Q2 FY27 income of Rs 21,794 crore, up 47% year on year, but operating profit rose only 6% to Rs 597 crore as expenses increased 48%. Operating profit margin therefore fell 110 basis points, or bps, to 2.7%. Reported profit after tax before non-controlling interest fell 45% to Rs 411 crore.

What did Dixon report for Q2 FY27?

Dixon reported higher Q2 FY27 income, while expense growth slightly exceeded income growth. Income increased from Rs 14,855 crore in Q2 FY26 to Rs 21,794 crore, adding Rs 6,939 crore. Expenses rose from Rs 14,294 crore to Rs 21,197 crore, or 48%, leaving operating profit at Rs 597 crore compared with Rs 561 crore a year earlier.

The reported statement shows a sharper decline below operating profit because other income fell 86% to Rs 69 crore from Rs 496 crore. Earnings before interest, tax, depreciation and amortisation, or EBITDA, declined 37% to Rs 666 crore from Rs 1,057 crore. Depreciation rose 16% to Rs 111 crore, while finance cost fell 32% to Rs 26 crore.

Why did Dixon’s operating margin fall in Q2 FY27?

Dixon’s operating margin fell because expenses increased 48%, compared with a 47% increase in income. Operating profit margin was 2.7% in Q2 FY27 versus 3.8% in Q2 FY26, a 1.1 percentage-point decline. Although income increased by Rs 6,939 crore, operating profit increased by Rs 36 crore.

The first-half figures show the same relationship between income and expenses. In H1 FY27, income rose 35% to Rs 37,341 crore from Rs 27,691 crore, while expenses increased 36% to Rs 36,281 crore. Operating profit rose 2% to Rs 1,060 crore, and operating margin declined 100 bps to 2.8% from 3.8%.

Dixon’s adjusted statement also records a lower Q2 EBITDA margin after excluding specified gains. Adjusted EBITDA increased 8% to Rs 609 crore from Rs 564 crore, but adjusted EBITDA margin declined to 2.8% from 3.8%. This presentation excludes the fair-value gain on Dixon’s stake in Aditya Infotech Limited and the gain on transfer of the lighting business undertaking.

How did other income affect Dixon’s reported Q2 profit?

Lower other income materially affected Dixon’s reported Q2 earnings comparison. Reported other income was Rs 69 crore in Q2 FY27, compared with Rs 496 crore in Q2 FY26, while adjusted other income was Rs 12 crore compared with Rs 3 crore. The company states that reported other income includes the fair-value gain on its Aditya Infotech Limited stake and the gain on transfer of its lighting business undertaking.

Reported profit before tax after the share of profit from joint ventures declined 42% to Rs 532 crore, while the adjusted figure increased 10% to Rs 475 crore. Reported profit after tax, or PAT, before non-controlling interest, or NCI, fell 45% to Rs 411 crore. On the adjusted basis, PAT before NCI increased 11% to Rs 360 crore from Rs 323 crore.

The margin movement differs between the reported and adjusted presentations. Reported PAT margin fell to 1.9% in Q2 FY27 from 5.0% in Q2 FY26, a 310-bps reduction. Adjusted PAT margin declined to 1.7% from 2.2%, a 50-bps reduction, showing the margin change after the specified gains are removed.

What did Dixon’s H1 FY27 results show?

Dixon’s H1 FY27 reported PAT increased despite the Q2 decline because reported other income rose 20% to Rs 597 crore from Rs 497 crore. The company reported a Rs 576 crore fair-value gain on its Aditya Infotech Limited stake in H1 FY27, compared with Rs 465 crore in H1 FY26. H1 FY26 also included a Rs 28 crore gain on transfer of the lighting business undertaking.

On the reported basis, H1 EBITDA rose 8% to Rs 1,657 crore from Rs 1,541 crore, while EBITDA margin declined to 4.4% from 5.6%. Profit before tax after joint ventures increased 9% to Rs 1,401 crore. PAT before NCI rose 10% to Rs 1,129 crore and PAT after NCI increased 13% to Rs 1,007 crore from Rs 895 crore.

The adjusted H1 comparison shows positive profit growth without the identified gains, alongside lower margins. Adjusted EBITDA rose 3% to Rs 1,081 crore, and adjusted EBITDA margin declined 90 bps to 2.9%. Adjusted PAT before NCI increased 5% to Rs 633 crore, while adjusted PAT after NCI rose 8% to Rs 511 crore.

How did depreciation, finance cost and NCI affect Q2 earnings?

Dixon’s lower finance cost partly offset higher depreciation in Q2 FY27. Finance cost declined by Rs 12 crore to Rs 26 crore, while depreciation rose by Rs 15 crore to Rs 111 crore. Reported earnings before interest and tax fell 42% to Rs 555 crore, and reported profit before tax before joint ventures fell 43% to Rs 529 crore.

Tax fell 32% to Rs 121 crore from Rs 178 crore as reported profit before tax declined. NCI, which represents profit attributable to non-controlling interests, decreased 12% to Rs 67 crore from Rs 76 crore. As a result, PAT after NCI was Rs 344 crore in Q2 FY27, down 49% from Rs 670 crore in Q2 FY26.

The H1 figures followed a similar financing and depreciation pattern. Finance cost declined 30% to Rs 50 crore, while depreciation increased 15% to Rs 217 crore. Tax increased 3% to Rs 272 crore and NCI decreased 7% to Rs 122 crore, alongside reported H1 PAT after NCI of Rs 1,007 crore.

Conclusion

Dixon’s Q2 FY27 figures show that 47% income growth did not translate proportionately into operating profit growth. Expenses rose 48%, leaving operating profit up 6% and reducing operating margin to 2.7% from 3.8%. The reported PAT decline also coincided with other income falling to Rs 69 crore from Rs 496 crore, whereas adjusted PAT before NCI increased 11%.

The next results comparison will show whether expense growth continues to exceed income growth after H1 FY27 expenses rose 36% against 35% income growth. It will also clarify the effect of other income after the disclosed Rs 576 crore H1 FY27 fair-value gain on Dixon’s Aditya Infotech Limited stake.