Effwa H1 FY27 PAT rose 48.8% despite EBITDA margin decline

Effwa reported H1 FY27 revenue of Rs 130.649 crore, up 44.8% year on year, while profit after tax rose 48.8% to Rs 15.097 crore despite a 90-basis-point decline in EBITDA margin to 16.2%. Higher Zero Liquid Discharge project execution drove growth, while lower finance cost helped lift net profitability.

How did Effwa's H1 FY27 financial performance change?

Effwa's revenue from operations rose to Rs 130.649 crore in H1 FY27 from Rs 90.209 crore in H1 FY26, a 44.8% increase. Earnings before interest, tax, depreciation and amortisation, or EBITDA, increased 37.1% to Rs 21.154 crore, while profit after tax, or PAT, rose 48.8% to Rs 15.097 crore from Rs 10.144 crore.

Profit before tax increased 48.5% to Rs 20.129 crore in H1 FY27 from Rs 13.556 crore a year earlier. Earnings per share increased to Rs 6.52 from Rs 4.38, while management attributed the revenue rise to accelerated project execution, completed milestones and demand for high-value Zero Liquid Discharge, or ZLD, solutions.

Effwa's cost of goods sold increased to Rs 95.851 crore in H1 FY27 from Rs 62.324 crore in H1 FY26. Employee expenses rose to Rs 8.438 crore from Rs 7.127 crore, whereas other expenses declined to Rs 5.205 crore from Rs 5.333 crore, leaving EBITDA growth below the revenue growth rate.

Why did Effwa's EBITDA margin decline while PAT margin rose?

Effwa's EBITDA margin fell to 16.2% in H1 FY27 from 17.1% in H1 FY26, a decline of 90 basis points, or bps, where one basis point equals one-hundredth of a percentage point. Its earnings before interest and tax margin similarly declined 90 bps to 16.1%, while PAT margin increased 40 bps to 11.6% from 11.2%.

The lower finance-cost charge accompanied the differing operating and net-margin movement. Finance cost fell to Rs 0.885 crore in H1 FY27 from Rs 1.760 crore in H1 FY26, while depreciation increased to Rs 0.140 crore from Rs 0.108 crore; the decline in finance cost was larger than the increase in depreciation.

Tax expense increased to Rs 5.032 crore from Rs 3.412 crore as profit before tax increased. The presentation does not provide a separate numerical explanation for the 90-bps EBITDA-margin decline, but its profit and loss statement shows a larger increase in cost of goods sold than in revenue on a percentage basis.

Which businesses and markets generated Effwa's H1 FY27 revenue?

Effwa's ZLD business generated Rs 127.564 crore in H1 FY27, compared with Rs 81.730 crore in H1 FY26, and accounted for 97.6% of service revenue. Effluent treatment plants with recycling accounted for 1.6% of service revenue and operations and maintenance, or O&M, accounted for 0.7%.

Revenue from effluent treatment plants with recycling fell to Rs 0.944 crore in H1 FY27 from Rs 6.119 crore in H1 FY26. O&M revenue increased to Rs 2.141 crore from Rs 1.338 crore, while the sewage and wastewater treatment plant vertical, which contributed Rs 1.021 crore in H1 FY26, recorded no revenue in the H1 FY27 vertical table.

Effwa reported that public-sector undertakings contributed 56.0% of H1 FY27 revenue and private-sector customers contributed 44.0%, with no government-department revenue reported. Domestic sales accounted for 99.3% of revenue, compared with 68.9% in H1 FY26, while export sales declined to 0.7% from 31.1%.

What did cash flow and working capital show in H1 FY27?

Effwa recorded net cash used in operating activities of Rs 23.729 crore in Sept-26, compared with net cash generated from operating activities of Rs 23.502 crore in Sept-25. Operating profit before working-capital changes rose to Rs 20.750 crore from Rs 14.020 crore, but working-capital changes moved to an outflow of Rs 39.447 crore from an inflow of Rs 12.894 crore.

Management said it advanced funds to suppliers to secure anticipated second-half revenue, reducing trade payables and temporarily pressuring operating cash flow. It also said revenue recognition for completed deliveries was deferred past the reporting date pending customer compliance approvals and software validations, raising inventory in the short term, and that the pending item had subsequently been received.

Inventories were Rs 8.970 crore at Sept-26, up from Rs 5.987 crore at Sept-25, while trade receivables rose to Rs 133.355 crore from Rs 95.472 crore. Cash and cash equivalents increased to Rs 46.754 crore from Rs 32.140 crore, while total current and non-current borrowings combined rose to Rs 69.516 crore from Rs 14.309 crore.

What has Effwa disclosed about project execution and expansion?

Effwa reported present orders in hand of more than Rs 675 crore and projects under pipeline of more than Rs 2,400 crore. It completed the Rourkela Steel Plant TS-II project for Steel Authority of India Limited, its first project with a contract value exceeding Rs 200 crore, and disclosed an ongoing JSW Steel project valued at more than Rs 350 crore.

Management said the JSW Steel project is expected to support revenue growth in coming periods. Effwa is also implementing enterprise-wide enterprise resource planning, or ERP, systems for real-time project monitoring, resource utilisation and cost controls, and management expects the O&M portfolio to scale as the installed project base expands.

Effwa plans to establish an Innovation Centre expected to become operational within 12 to 14 months. The company has also filed a patent application for Zero Material Discharge technology, which management describes as an advancement over ZLD that converts residual salt waste into high-purity products rather than requiring landfill disposal.

Conclusion

Effwa's H1 FY27 performance combined 44.8% revenue growth and 48.8% PAT growth with a 90-bps reduction in EBITDA margin. ZLD generated Rs 127.564 crore, or 97.6% of service revenue, while the lower finance cost of Rs 0.885 crore helped PAT margin increase to 11.6%.

The next reported milestones include execution of the more than Rs 350 crore JSW Steel project, conversion of the more than Rs 2,400 crore pipeline and the planned Innovation Centre within 12 to 14 months. Management's explanation of supplier advances, deferred revenue recognition and Rs 39.447 crore of working-capital outflow also makes cash-flow conversion a disclosed matter to watch.