FirstCry Q2 FY27 loss narrows while EBITDA margin declines

In Q2 FY27, FirstCry narrowed its reported profit after tax loss by 75.1% year on year to Rs 12.6 crore from Rs 50.5 crore, but adjusted EBITDA margin fell to 4.9% from 5.8% and inventory days reached 105. Revenue grew 14.1% to Rs 2,395.8 crore.

Why did FirstCry’s Q2 FY27 reported loss narrow?

FirstCry’s reported profit after tax, or PAT, loss narrowed to Rs 12.6 crore in Q2 FY27 from Rs 50.5 crore in Q2 FY26, reducing the loss margin to 0.5% of revenue from 2.4%. The result also improved from the Rs 44 crore reported loss in Q1 FY27. The presentation identifies a 75.1% year-on-year reduction but does not separately attribute the PAT movement to individual operating or non-operating items.

FirstCry’s adjusted PAT turned positive at Rs 7.7 crore in Q2 FY27, against an adjusted loss of Rs 4 crore in Q2 FY26 and a Rs 7.9 crore adjusted loss in Q1 FY27. The adjusted PAT margin was 0.3%, compared with negative 0.2% a year earlier and negative 0.4% in the preceding quarter. Reported PAT nevertheless remained negative, meaning the adjusted and reported measures had different outcomes.

How did FirstCry’s revenue growth affect margins?

FirstCry’s Q2 FY27 revenue increased by Rs 296.7 crore year on year to Rs 2,395.8 crore, while gross margin declined by 1.6 percentage points to 35.1% from 36.7%. Gross profit still rose to Rs 842 crore from Rs 770.1 crore because revenue increased. FirstCry described the 14.1% revenue growth as its strongest rate in the previous six quarters.

FirstCry’s adjusted earnings before interest, tax, depreciation and amortisation, or adjusted EBITDA, declined to Rs 117.5 crore from Rs 120.8 crore despite higher revenue. Its margin fell by 0.9 percentage points to 4.9% from 5.8%. The margin was above Q1 FY27’s 4.2%, when adjusted EBITDA was Rs 89.3 crore, but below each of the four quarterly margins reported in FY26.

Across the six reported quarters, FirstCry’s gross margin moved from 38.5% in Q1 FY26 to 34.8% in Q3 FY26, then recovered to 36.5% in Q1 FY27 before falling to 35.1% in Q2 FY27. Adjusted EBITDA margin peaked at 6.3% in Q3 FY26 and was 4.9% in Q2 FY27. The data show sales expansion alongside lower conversion of revenue into gross profit and adjusted EBITDA than in the comparable quarter.

Which costs changed in FirstCry’s Q2 FY27 result?

FirstCry’s direct cost increased to 8.9% of Q2 FY27 revenue from 8.8% in Q2 FY26, while marketing cost declined to 7.8% from 8.3% and indirect cost declined to 13.5% from 13.9%. In rupee terms, direct cost rose to Rs 214.6 crore, marketing cost to Rs 186.7 crore and indirect cost to Rs 323.2 crore. Indirect cost includes salary and other selling, general and administrative costs, excluding employee stock option plan cost.

FirstCry’s lower marketing and indirect-cost ratios did not offset the gross-margin reduction. Gross margin was 35.1% in Q2 FY27, while direct, marketing and indirect costs totalled 30.2% of revenue, leaving a 4.9% adjusted EBITDA margin. In Q2 FY26, gross margin was 36.7% and those three cost categories totalled 31.0%, leaving a 5.8% adjusted EBITDA margin.

What does FirstCry’s H1 FY27 performance show?

FirstCry’s H1 FY27 revenue increased to Rs 4,502.1 crore from Rs 3,961.6 crore in H1 FY26, while adjusted EBITDA declined to Rs 206.8 crore from Rs 213.5 crore. Adjusted EBITDA margin consequently fell to 4.6% from 5.4%. Gross profit increased by Rs 123.7 crore to Rs 1,611.4 crore, but gross margin declined by 1.8 percentage points to 35.8%.

FirstCry’s H1 FY27 direct cost remained 9.3% of revenue, marketing cost fell to 7.8% from 8.4%, and indirect cost fell to 14.1% from 14.5%. Absolute costs rose with revenue: direct cost reached Rs 418.4 crore, marketing cost Rs 349.4 crore and indirect cost Rs 636.8 crore. The first-half comparison shows that lower marketing and indirect-cost ratios coincided with a lower adjusted EBITDA margin as gross margin contracted.

Why did FirstCry’s inventory and working-capital days rise?

FirstCry’s inventory days increased to 105 in Q2 FY27 from 99 in Q2 FY26 and 91 in Q1 FY27, while net working-capital days rose to 61 from 54 sequentially. Inventory days were 85 in both Q3 FY26 and Q4 FY26, making Q2 FY27 the highest point in the six-quarter series. FirstCry said the measure was also affected by the advancement of festival and sale activity by third-party, or 3P, platforms.

FirstCry calculates working-capital and inventory days by dividing the respective balance by year-to-date revenue and multiplying by the number of days in the year-to-date period. Net working-capital days at 61 were nevertheless below the 67 days reported in Q2 FY26. This calculation means both the period-end balance and year-to-date revenue affect the disclosed day measures.

Conclusion

FirstCry combined faster Q2 FY27 revenue growth of 14.1% with a substantially narrower reported PAT loss and positive adjusted PAT. However, gross margin fell to 35.1%, adjusted EBITDA margin declined to 4.9%, and inventory days rose to 105, leaving profitability and working-capital trends mixed.

Management’s FY27 priorities include recovering India Multichannel manufacturing input-cost pressure through pricing pass-through, a higher home-brand mix and discount optimisation. It also plans to extend RocketBees coverage, expand FirstCry Qwik, resume store expansion, reduce International losses through product mix and operating efficiency, and build on Globalbees’ completed inventory and warehouse transition.